Massachusetts sales tax for online sellers: nexus, permit and filing

What is the Massachusetts sales tax rate?

The rate is 6.25% statewide, and Massachusetts has no local general sales taxes, so the same rate applies to every delivery address. Most clothing is exempt up to $175 per item, with tax charged only on the amount above that. Groceries are exempt. Software is taxable, including software that customers access online.

When does an online seller have to collect in Massachusetts?

You must collect if you have a physical presence in Massachusetts, such as staff, an office or inventory, or if your sales into Massachusetts are more than $100,000 in the current or previous calendar year. There is no transaction-count test, and both taxable and exempt sales count. Sales made through a marketplace that collects the tax are not counted towards your own threshold. Under the Department's rule, a seller that passes the threshold during a year registers and starts collecting two months later, from the first day of the month.

How nexus works in general is covered in physical vs economic nexus and economic nexus explained.

What if you sell on Amazon, eBay or Etsy?

Massachusetts requires marketplace facilitators to collect and remit sales tax on the sales they facilitate, so you do not collect on those orders. Your own website and other direct channels remain your responsibility. See marketplace facilitator laws.

How do you register?

Register online through MassTaxConnect, the Department of Revenue's portal, for a sales and use tax registration. There is no fee.

What are the steps once you have nexus?

1. Confirm nexus

   Check your presence and your sales into Massachusetts against its threshold.

2. Register before collecting

   With the Massachusetts tax agency, as set out above.

3. Set up your store

   Charge the correct combined rate for each delivery address and product.

4. File and pay

   On the schedule Massachusetts assigns, including zero returns where required.

How are returns filed?

Returns are filed through MassTaxConnect and are due 30 days after the end of the period. The Department assigns monthly, quarterly or annual filing based on the tax you collect in a year. A return is required for every period, including periods with no sales.

See how to file a sales tax return.

How does the clothing exemption work?

Clothing and footwear for everyday wear are exempt up to $175 for each item. Above that, only the excess is taxed. A $250 coat is taxed on $75, which is $4.69 at 6.25%; a $120 pair of shoes is not taxed at all. Athletic and protective clothing designed for a sport or a job is taxable in full. If you sell apparel, your store needs to apply the exemption item by item, not to the order total.

Is software taxed in Massachusetts?

Yes. Massachusetts taxes standard software however it is delivered, including software accessed online, which many states do not tax. Sales of software count towards the $100,000 threshold too, so a software seller can have nexus without shipping goods. See sales tax on SaaS.

What else should sellers know?

• Sellers outside the US: the same rules apply wherever the business is based. See selling on Amazon US as a non-resident.
• Late registration: tax you should have collected becomes your own debt. See voluntary disclosure agreements and collected but not remitted.
• Records: keep sales by delivery address, tax collected and any certificates. See exemption certificates and sales tax audits.
• Stopping: returns stay due until the account is closed. See filing frequency and cancelling a sales tax permit.
• Store settings: switch on collection only once you are registered. See Shopify sales tax setup.

This guide is general information. It is not tax or legal advice for your situation.