4 things to know about the tax-free weekend

Massachusetts consumers won’t have to pay the state’s 6.25% sales tax on most retail items this weekend, Aug. 10-11.

For the two days each year, eligible retail items of up to $2,500 purchased in Massachusetts for personal use are exempt from sales tax, according to the Department of Revenue. Last year, indirect tax revenues due to increased economic activity were approximately $3.54 million.

“The sales tax holiday is a great opportunity for residents to get out and support the local businesses in their community and get some shopping done during a time of year when people are gearing up for the fall,” Senate President Karen E. Spilka said in a statement.

All retailers are required to participate in the sales tax holiday if the business is open during the weekend and makes taxable sales in the state or to Massachusetts purchasers.

The tax-free weekend came to be in 2018 when Gov. Charlie Baker signed the “grand bargain” bill into law, establishing a permanent sales tax holiday for two days in August  — typically a slow month for retailers — each year in an effort to benefit both individuals and small businesses.

“The sales tax holiday provides significant relief to families during a time of year where their checkbooks are already stretched from the purchase of back-to-school supplies and other family expenses,” Sen. Susan L. Moran said in a statement. “It’s also a vital tool in bolstering our economy, especially for our cherished small businesses, who often operate on thin margins.”

What qualifies for the sales tax holiday

The sales tax holiday applies to items bought by individuals for personal use. 

Any item bought online during the sales tax holiday during Eastern Daylight Time is also eligible, and no sales tax is due on the purchase even if the item will be delivered after the holiday weekend.

Consumers can rent items for up to 30 days, but the rental must be paid in full during the holiday.

Items that are not eligible for the sales tax holiday

Items bought by corporations or by individuals for business purposes remain taxable. Layaway sales also do not qualify.

Other items that do not qualify for the sales tax holiday include:

• Meals
• Motor vehicles
• Motorboats
• Telecommunications services
• Gas
• Steam
• Electricity
• Tobacco products
• Marijuana or marijuana products
• Alcoholic beverages
• Any single item whose price is more than $2,500

Limitations for the sales tax holiday

The tax holiday only applies to items that cost $2,500 or less. 

Consumers can buy as many items as they want that individually cost less than $2,500, even if their combined total is over that amount. But if the cost of an item exceeds $2,500, that purchase is subject to sales tax. 

Clothing items are exempt from the sales tax unless the item costs over $175, in which case only the amount over $175 is taxable.

Consumers aiming to evade taxes on prior purchases may face restrictions. 

Individuals cannot cancel and rebook purchases on the sales tax weekend if they already put down a deposit, prepaid for, or otherwise promised payment for an eligible item before the weekend.

What happens after the holiday

No tax is due even if an item is exchanged or returned after the holiday has ended. 

If sales tax is accidentally applied to a purchase, the business that charged it is responsible for providing a refund.

When reporting taxes for the month, on line 2 of “exempt sales” of the August Sales and Use Tax Return, individuals are required to report the sales amount of the items they bought during the two days.