Increased Sales Tax

Question: I am on a fixed income and I am concerned about the increase in sales tax. Will everything I buy cost more because of this tax? I’m uncertain about what is taxed and what isn’t taxed.

Answer: As part of the 2010 budget debate, the state legislature and the Governor agreed to raise sales taxes to help offset budget deficits. On August 1, 2009 the sales and meals tax in Massachusetts increased from 5% to 6.25%. The sales tax usually is paid to a vendor as an addition to your purchase price. You pay the sales tax to the vendor at the time of purchase, and the vendor then sends the tax to the Commonwealth.

The new sales tax rate did not change what items are subject to the tax—with one notable exception. Alcoholic beverages—including beer, wine, and liquor, sold at package or liquor stores—are now subject to the 6.25% sales tax for the first time.

There are many items in the Commonwealth that are exempt from the sales tax. Some of the major exemptions include: sales of food (not counting meals sold at restaurants); sales of items of clothing costing $175 or less; sales of newspapers and magazines; sales of tickets to sporting and amusement events; sales of gas, electricity, and heating fuel for residential uses; residential phone services up to $30 a month; charges for professional services like accounting, insurance, legal and medical services, as well as services such as haircuts and car repairs (some items sold as part of these services can be taxable, like auto parts or a bottle of shampoo); and sales of used appliances by a homeowner or sales at infrequent yard sales (but sales of cars, boats, and trailers are usually taxable at the time of registration).

As mentioned, most clothing items under $175 are exempt. Again, there are some clothing-related exceptions that are taxable and these include bathing caps, footwear for specific sports (like bowling and golf shoes), and sewing supplies.

Although most food items are not subject to the sales tax, items such as antacids, vitamins, dietary supplements and weight-loss aids are taxable. Food sold at the restaurant part of a store is taxable, and food sold as “take out” or “to go” is also taxable.

Some health care items and equipment are taxed, some are not. For example, you won’t pay sales tax on prescription drugs, diapers, crutches, colostomy bags, hearing aids, prescription glasses, tampons, wheelchairs, or baby oil. But you will be taxed on nonprescription drugs, adhesive tape, baby powder, bandages, bed pans, cosmetics, deodorants, heating pads, sun lamps, thermometers, and vitamins. These items have been taxed and are now taxed at the higher rate. Health items you need to rent, such as canes, hospital beds, dialysis machines, oxygen masks, pacemakers, etc. are not taxed.

One area of confusion might be with the tax on clothing since clothing over $175 is taxable. If you bought a dress or a suit for $200, under the old sales tax you would pay $1.25 in tax ($200-$175=$25 x 5%). Now you will pay $1.56 in tax ($200-$175=$25 x 6.25%). If you buy a number of items of clothing at once, the only sales tax you will pay is on the individual items that are over $175, not on the total bill.

There is no doubt that you’ll be paying more for some items. I suppose the good news is that there are many other items that are tax exempt! Should you have a question about other specific items’ tax status, call the Commonwealth’s Department of Revenue at 1-800-392-6089.

One idea to minimize your tax, especially if you are older, is to look for “senior discounts” at area merchants. The money you save on your discount may more than offset the increase in the sales tax you will be asked to pay.