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Massachusetts Sales and Meals Taxes to Rise as of August 1st 2009

     The recently signed Massachusetts budget includes provisions to increase the sales and meals taxes for the first time since 1975. The increase to 6.25% will make Massachusetts sales and meals taxes the 3rd highest in the region. New York and Rhode Island will still have higher rates and the meals tax will continue to be higher in New Hampshire than in Massachusetts. The room occupancy tax is also going to rise.

As of August 1, 2009:

  • The sales and meals tax rates will be 6.25%

  • Sales of alcoholic beverages will be subject to sales tax (they used to be exempt)

  • For hotels, the local option room occupancy rate will go to 6% (6.5% for Boston). The current statewide rate will stay at 5.7%. This means the total rate would go from 9.7% to 11.7% (12.2% in Boston)

As of October 1, 2009:

  • Local cities and towns will have the option to add 0.75% to the meals tax, with the funds raised staying in that community.

     Be sure to update your accounting software to reflect the new rates as of August 1st and, if needed, October 1st

     For example, in QuickBooks you can edit the rate of the Massachusetts sales tax in the Items List. From that point on, the sales tax will be calculated at the new rate. If you sell alcoholic beverages at retail and have set up sales tax exempt items in your accounting software for these sales you will need to change the items to reflect their new taxability.

 

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