Wed, August 13, 2008
Massachusetts Sales Tax Holiday This Weekend
For the fifth year in a row, Massachusetts will have a “sales tax holiday” on purchases of many items costing less than $2,500 on August 16-17. The Commonwealth joins fifteen other states and the District of Columbia in this attempt to boost in-state retail sales by exempting purchases from the 5% state sales tax.
Apparently there was some debate on the question of whether Massachusetts could afford to give up tax revenues this year. Legislators in Maryland and Florida pulled the plug on their tax holidays for this very reason. In past years, the MA Department of Revenue has estimated that the holidays boosted retail spending by $200-300 million.
I imagine that a lot of people probably hold off planned purchases in anticipation of the day. It would be interesting to know how much sales volume on these weekends comes from New York, Connecticut and Rhode Island residents coming into MA for a break from their local sales taxes. Connecticut’s tax holiday is limited to clothing and footwear, Vermont has its own tax holiday, and New Hampshire still manages to get by with no sales tax at all, which explains all those shopping malls at the border.
If you live in or near Massachusetts, this weekend is a good time to buy furniture, appliances, and other fairly big-ticket items if you need them. Some retailers will probably run sales to sweeten the pot. Telecommunications services, tobacco products, gas. steam, electricity, motor vehicles, motorboats, and meals are not included in the exemption from sales tax, but other items under $2,500 that normally are taxed are fair game.
Most merchants have been willing to let you indicate your desired purchases before the actual weekend. They’ll take your check or credit card number and complete the transaction for you during the holiday. Some friends of mine were able to reduce the tax paid for their wedding reception by taking advantage of this option. If you’re really good at planning your purchases, you could save a fair amount this weekend, and for most people it beats driving to New Hampshire.
For information on sales tax holidays in other states, the Federation of Tax Administrators web site has a table showing state sales tax holidays and the dates when they take place.