Massachusetts Sales & Use Tax 2025
Massachusetts Sales Tax Guide for SaaS and E-Commerce Businesses 2025
2025-09-12
Massachusetts imposes a 6.25% sales and use tax on tangible goods, many digital products, and Software-as-a-Service (SaaS) when it qualifies as prewritten (standardized) software. Unlike states with complex parish or county add-ons, Massachusetts applies a flat statewide rate with no local sales tax.
This guide explains how SaaS companies and e-commerce sellers are taxed in Massachusetts, including nexus rules, marketplace facilitator obligations, filing deadlines, and exemptions.
Last updated: September 2025
Quick Reference: Massachusetts Sales & Use Tax 2025
| Topic | Details |
|---|---|
| Statewide sales tax rate | 6.25% (Massachusetts DOR – Sales & Use Tax) |
| Local rates | 0% |
| Economic nexus threshold | $100,000 in Massachusetts sales (Remote Seller & Marketplace FAQs) |
| Is SaaS taxable? | Yes. SaaS is generally taxed as prewritten software under 830 CMR 64H.1.3 (Regulation) |
| Filing due date | Assigned by DOR; generally 20th of the month after the reporting period |
| Registration portal | MassTaxConnect |
| Tax agency | Massachusetts Department of Revenue |
SaaS & Digital Products in Massachusetts
Massachusetts law taxes prewritten (standardized) software, including SaaS, regardless of how it is delivered.
Key SaaS Rules
- Taxable: Most standardized SaaS subscriptions (e.g., CRM, project management, accounting platforms).
- Exempt: Software that is custom-built or substantially modified for a single purchaser. Charges for customization must be separately stated to remain exempt.
- Bundled products: If SaaS is bundled with services or goods, and charges are not separately itemized, the entire bundle may be taxable. If separately stated, only the taxable portion is taxed.
Source: 830 CMR 64H.1.3 – Computer Industry Services & Products
E-Commerce & Tangible Goods in Massachusetts
While SaaS dominates digital business, Massachusetts also taxes traditional e-commerce sales, but with important exemptions:
| Category | Taxable? | Notes |
|---|---|---|
| Tangible goods | Yes, some exempt | Clothing is exempt up to $175 per item (amount above $175 is taxable); most food for human consumption is exempt; prescription drugs and many medical supplies are exempt; sales to certain nonprofit and government organizations are also exempt (Massachusetts DOR – Tax-Exempt Items & Sales). |
| SaaS & software | Yes | Prewritten/standardized software taxable whether downloaded or cloud-based |
| Custom software | No | Exempt if specifically designed/modified for one purchaser |
| Digital products | Yes | Downloads, e-books, streaming subscriptions |
| Services | Some | Professional services exempt; standardized IT/SaaS taxable |
Massachusetts uses destination-based sourcing: the sales tax is calculated based on the customer’s location, not the seller’s. (DOR – Sales & Use Tax)
Economic Nexus: Remote Seller Rules
Remote sellers must register and collect Massachusetts sales tax if:
- Sales into Massachusetts exceed $100,000 in the current or prior calendar year.
See: Remote Seller & Marketplace Facilitator FAQs
Marketplace Facilitator Rules
Marketplace facilitators (e.g., Amazon, Etsy, Shopify) must register and collect tax if:
- Their combined Massachusetts sales exceed $100,000 in a year.
- Once registered, they must collect on all third-party sales.
- Marketplace sellers should obtain a Marketplace Facilitator Certificate of Collection from their platform.
Source: Remote Seller & Marketplace Facilitator FAQs
Filing & Due Dates
- File via: MassTaxConnect
- Filing frequency: Monthly, quarterly, or annually, as assigned by DOR based on sales volume.
- Due date: Returns and payments are due by the 20th of the month following the reporting period.
- Zero returns: Required even if you made no taxable sales during the period.
Penalties & Compliance Notes
- Penalty for failure to file on time: 1% per month (or fraction thereof) of the tax required to be shown on the return, up to 25% total.
- Penalty for failure to pay on time: 0.5% per month (or fraction thereof) of the unpaid tax, up to 25% total.
- Penalty for failure to pay an assessment when required: Also 0.5% per month, up to 25%.
- Interest: Accrues from the original due date of the return on any unpaid tax, at rates set under Massachusetts law.
- Recordkeeping: Maintain good documentation of returns, payments, custom vs prewritten software status, marketplace facilitator collection certificates, etc.
See: Massachusetts Regulation 830 CMR 62C.16.2 — Returns & Payments for full details.
FAQs: Massachusetts Sales Tax for SaaS & E-Commerce
Is SaaS taxable in Massachusetts?
Yes. SaaS is considered prewritten software and taxed at 6.25%, even if accessed remotely. (830 CMR 64H.1.3)
Is custom software taxable?
No. Custom-built or substantially modified software for one client is exempt, provided charges for customization are separately stated.
Are tangible goods sold online taxable in Massachusetts?
Yes. Clothing, electronics, and most goods shipped to Massachusetts are subject to the 6.25% statewide rate. (Sales & Use Tax Guide)
What is Massachusetts’ economic nexus threshold?
Remote sellers must register if sales exceed $100,000 in a year. (Remote Seller FAQ)
Do marketplace facilitators have to collect?
Yes. Marketplaces must collect and remit tax on behalf of sellers once the $100,000 threshold is met.
Does Massachusetts have local sales tax?
No. Only the statewide 6.25% rate applies.
Official Massachusetts Resources
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