Business

Here’s what to know about this weekend’s sales tax holiday

Shoppers could save some serious money this weekend.

People wait in line to shop on Newbury Street during the annual tax-free holiday in 2021. Erin Clark/Globe Staff

By Ross Cristantiello

3 minutes to read

This weekend, shoppers across Massachusetts will be able to cash in on the state’s annual sales tax holiday. 

The holiday has been a permanent fixture in the state since 2018, when Gov. Charlie Baker signed the so-called “grand bargain” bill into law. The bill also raised the state’s minimum wage and implemented a guaranteed paid family and medical leave program. 

Normally, the holiday is scheduled for mid-August. This strikes the “right balance,” because it hits the beginning of back-to-school shopping season and happens when many residents are back from summer vacations, Retailers Association of Massachusetts President Jon Hurst told State House News Service. Hurst estimated that the holiday generates about half a billion dollars each year for Massachusetts businesses. 

Advertisement:

Here’s everything you need to know.

The basics

On Aug. 12 and 13, the state’s 6.25% sales tax will not apply to most retail items sold here. 

This only applies to eligible retail items bought for personal use by individuals. Purchases made by businesses as well as purchases made by individuals for business use are not eligible. 

The tax holiday only applies to items that cost $2,500 or less. A few other specific purchases are not eligible:

  • Meals
  • Cars
  • Gas
  • Tobacco products
  • Marijuana products
  • Alcohol
  • Motorboats
  • Telecommunications services

Shoppers won’t need to head out to physical storefronts to take advantage. Items bought online by those in Massachusetts are eligible, even if delivery of the item happens after the sales tax holiday. 

Advertisement:

Layaway sales, where a retailer retains custody of an item while a customer pays the full price in installments, are not eligible for the tax holiday. 

Many rentals, however, do qualify. The same restrictions apply to rented items, as cars and motorboats cannot be rented without incurring a sales tax. The sales tax exemption can be used for rentals of up to 30 days. 

All businesses that are open for business this weekend must participate, as long as they normally make “taxable sales of tangible property in Massachusetts or to purchasers in Massachusetts.”

Limitations and specifics

If shoppers spend more than $2,500 on an item, the entire amount paid will be taxed, not just the amount above the threshold.

People do not need to worry if they make multiple purchases that add up to an amount over $2,500. As long as the individual prices of the items are below the threshold, they will not be taxed. 

Clothing is different. In Massachusetts, many clothing items are not normally subject to sales tax anyway. Individual clothing items that cost less than $175 are not taxed. Those that exceed $175 are only taxed on the amount above that threshold. 

On the sales tax holiday, the entire price of clothing items that cost $2,500 or less will not be taxed. If a clothing item costs more than $2,500, the first $175 is not subject to tax but the rest is. 

Advertisement:

Purchases made before the sales tax holiday cannot be canceled and rebooked on the holiday, even if a business is advertising this. If a shopper put a down payment on an item, prepaid for an item, or otherwise promised to pay for an eligible item prior to the sales tax holiday it cannot be rebooked to avoid the tax. 

After the holiday

Items purchased this weekend do not need to be taken home this weekend. As long as an item is paid in full during the holiday, delivery can be arranged for afterwards. 

If a shopper is unhappy with their purchase, they can exchange or return the item afterwards. No tax is due if an exchange is made, and it will not be taxed retroactively. 

Businesses that tax a shopper in error are responsible for giving them a refund of the tax that was paid. If this happens, shoppers should provide the business with receipt or proof of purchase. 

Retailers that accidentally collect sales tax on eligible items during the holiday must remit the erroneously collected tax to the Massachusetts Department of Revenue. 

Ross Cristantiello

Staff Writer

Ross Cristantiello, a general assignment news reporter for Boston.com since 2022, covers local politics, crime, the environment, and more.

To comment, please create a screen name in your profile

Conversation

This discussion has ended. Please join elsewhere on Boston.com