Boston Sales Tax Guide for Businesses

No matter where you live or where your online business is based — if you have customers in Boston, you must follow local sales tax rules in addition to Massachusetts's rules. That's what this guide is for! This guide includes everything you need to know about digital tax laws in Boston, whether your customers live in Beacon Hill or Back Bay.

Boston Tax Jurisdiction Breakdown for 2024

• Massachusetts State Sales Tax: 6.25%
• Suffolk County Sales Tax: 0%
• Boston City Sales Tax: 0%

What is the sales tax rate in Boston, Massachusetts?

The total 2024 sales tax rate for Boston, Massachusetts, is 6.25%. This is the total of the state sales tax rate. Massachusetts does not have county or city sales tax rates, so the state rate is the total rate applied across all transactions.

These rates go for standard taxable products. But other rates might apply to your business.

If you’re selling “vice” products like tobacco or alcohol, you might have an increased rate. If you’re selling essential items, such as medicine or clothing, or educational materials, you might have an exempt or reduced rate. More on that next!

What products are exempt from Boston sales tax rate?

• Grocery food items intended for home preparation and consumption
• Prescription medicines
• Clothing up to $175 per item (amounts above $175 are taxed on the value exceeding $175)
• Newspapers and periodicals
• Sales of real property
• Utilities (including heating fuel, electricity, and natural gas for home use)

What digital products are taxed in Boston?

First, let’s confirm what you’re trying to sell in Boston. Are you selling digital products?

A digital product is any product that’s stored, delivered, and used in an electronic format. These are goods or services that the customer receives via email, by downloading them from the Internet, or through logging into a website.

You’re probably consuming and using digital products all day long, whether or not you realize it. Here are some common ones on the market today:

• E-books, images, movies, and videos, whether buying a copy from Shopify or using a service like Netflix. In tax language, these products are in a category usually called, “Audio, visual, or audio-visual products.”
• Downloadable and streaming music, whether buying an MP3 or using a service like SoundCloud or Spotify. Of course, these products also fall in the audio category.
• Cloud-based software and as-a-Service products, such as Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS).
• Websites, site hosting services, and internet service providers.
• Online ads and affiliate marketing. Income from these services can be considered taxable under digital tax policies.

These digital products are considered tangible personal property for tax purposes, and the standard state tax rate of 6.25% applies.

How does Boston sales tax compare to the rest of Massachusetts?

The sales tax rate in Boston is the same as the rest of Massachusetts since the state does not allow local jurisdictions like cities or counties to impose additional sales tax rates. The uniform state sales tax rate is 6.25%.

Learn more about sales tax rules state-wide in this business guide to sales tax in Massachusetts.

What creates sales tax nexus in Boston?

Since Boston is located in Massachusetts, it follows the same state-level sales tax nexus rules.

Forms of Massachusetts state sales tax nexus include:

• Economic nexus: When a business sells goods worth $100,000 in the state within the previous or current tax year. More on that below!
• Physical location: This could be an office or a warehouse holding your inventory.
• Employee location: If you have an employee or any other type of representation based in a particular state or city, your business must register for sales tax there.
• Affiliate nexus: If you rely on in-state businesses to promote and refer your business, and you receive a substantial amount of income through these affiliates, then you have sales tax nexus.
• Trade Shows: Even if you don’t have real estate in a place, if you visit trade shows or markets for more than 15 days in the calendar year, that’s enough of a physical present to constitute sales tax nexus in Massachusetts.

Boston economic nexus as a remote seller

If your business is fully located outside of Massachusetts, then economic nexus is your main concern. Here’s how it works.

The economic threshold amount refers to your total sales in the whole state, during any 12-month period. This can be a calculation of sales in the last twelve months, or a prediction of sales in the next twelve months — any rolling year-long period, past or future.

Basically, if your annual sales in Massachusetts remain below $100,000, then you don’t need to worry about sales tax at all. Phew!

But once your sales do surpass $100,000, then you must register for sales tax and comply with all of the Massachusetts rules around tax rate and collection, invoices, and filing returns.

Who needs a seller’s permit in Boston?

Any business with sales tax nexus, according to the rules above, must apply for a seller’s permit in Massachusetts right away.

The seller’s permit comes with a sales tax registration number, which establishes you in the Massachusetts tax system as a legal business. This number tracks your business through the system: the taxes you pay, the tax credits you receive, plus the tax you charge from customers.

How to get a seller’s permit in Boston

So, it turns out you do need to register for tax in Boston. Don’t worry! Just follow these instructions on how to register for sales tax in Massachusetts and that will cover you across the state.

How to calculate Boston sales tax?

Once you’re registered for taxes, you’re expected to apply sales tax to every taxable sale to a Boston resident. That means 6.25% for most products.

If your customer is a fellow business, and they’ve provided a valid sales tax exemption certificate, then adding and collecting tax isn’t necessary.

How to collect sales tax in Boston

Tax-compliant receipts in Boston

In order to comply with tax laws, you should include the following information on your receipts or invoices to customers in Boston:

• Your business’ name and address
• Your business’ sales tax registration number
• Invoice date
• Invoice sequencing number
• Buyer’s name and address
• Buyer’s sales tax registration number, if they have one.
• sales tax (amount and rate) applied to each item
• Final amount after tax is added

The easiest solution for the sales tax receipt would be to use a sales tax software that automatically generates and sends all invoices (as soon as the sale is complete), and also stores them in the cloud for you.

Quaderno provides automatic tax invoicing for every transaction. The app sends tax-compliant receipts, invoices, and credit notes automatically, on the spot. You can also set up recurring invoicing.

In fact, Quaderno helps automate many other parts of tax compliance, from adding the correct tax rate calculations to your sales to providing instant reports for filing returns. Give it a try for free.

How to file and pay sales tax in Boston

Charging and collecting tax is only the first half of staying compliant. The second half is filing returns and paying whatever you might owe to the government.

Massachusetts businesses must file sales tax returns based on their volume of sales:

• Businesses with high sales volumes file monthly.
• Smaller businesses may file quarterly or annually.

Massachusetts sales tax returns are due on the 20th day of the month following the reporting period. If the due date falls on a weekend or holiday, filings are due the next business day.

You can usually file and pay online! Check out more instructions on how to file sales tax in Massachusetts.