Who Has to Pay Massachusetts Use Tax?

Massachusetts imposes a 6.25% use tax on taxable purchases when Massachusetts sales tax was not paid at the time of purchase. The purpose of the tax is to ensure taxable purchases are taxed consistently, whether they are made in Massachusetts, online, or from an out-of-state seller.

Program Entry

Massachusetts Return → Tax → Use Tax

Who Must Pay Massachusetts Use Tax?

You may owe Massachusetts use tax if all the following apply:

• You purchased taxable goods or services for use in Massachusetts.
• Massachusetts sales tax was not paid at the time of purchase.
• The seller did not collect and remit Massachusetts tax on the purchase.

Common examples include:

• Online purchases where no Massachusetts sales tax was charged
• Purchases from out-of-state retailers
• Items purchased while traveling outside Massachusetts and brought back for use in Massachusetts

How Is Use Tax Calculated?

Massachusetts use tax is generally calculated at 6.25% of the purchase price, which is the same rate as Massachusetts sales tax.

You can calculate use tax by either:

• Reporting the actual tax owed based on receipts and purchase records, or
• Using the Massachusetts safe harbor method if eligible.

What Purchases Are Subject to Use Tax?

Use tax generally applies to taxable items purchased for storage, use, or consumption in Massachusetts when sales tax was not paid.

Common examples include:

• Furniture
• Electronics
• Computers
• Appliances
• Jewelry
• Books
• Artwork
• Carpet
• Software
• CDs and DVDs
• Video games
• Home improvement materials
• Certain taxable services

What Purchases Are Not Subject to Use Tax?

Use tax is generally not due if:

• Massachusetts sales tax was already paid.
• Sales or use tax was paid to another state and a credit is allowed under Massachusetts law.
• The purchase is exempt from Massachusetts sales tax.

For example, many clothing purchases and certain grocery items that are exempt from Massachusetts sales tax are also exempt from use tax.

Safe Harbor Method

Massachusetts allows many taxpayers to estimate use tax using a safe harbor method instead of tracking every purchase.

If you did not buy any individual item costing $1,000 or more, you may be able to report a safe harbor amount based on your Massachusetts AGI rather than calculating tax on every purchase.

Benefits of using the safe harbor method include:

• No need to keep detailed receipts for qualifying purchases
• Simplified reporting
• Protection from additional use tax assessments based solely on higher actual purchases if audited

If you purchased one or more items costing $1,000 or more, you must separately calculate and add the use tax due on those items.

Credit for Tax Paid to Another State

You may receive a credit for sales or use tax legally paid to another U.S. state or territory.

The credit generally cannot exceed the amount of Massachusetts use tax due on the purchase.

However, Massachusetts does not allow a credit for value-added taxes (VAT) paid to another country.

Entering Use Tax on Your Return

Amount of Use Tax Due

Enter the amount of Massachusetts use tax owed for taxable purchases made during the tax year.

The use tax is reported directly on your Massachusetts individual income tax return.

Examples

Example 1: Online Purchase

You buy electronics online for $500, and no Massachusetts sales tax is charged.

• Purchase price: $500
• Use tax rate: 6.25%
• Use tax due: $31.25

Example 2: Out-of-State Purchase

You purchase furniture for $2,000 while traveling and bring it home to Massachusetts.

• Purchase price: $2,000
• Use tax rate: 6.25%
• Use tax due: $125

Important Notes

• Taxpayers are responsible for reporting use tax even if Massachusetts does not send a bill.
• Keep receipts and records supporting your use tax calculations.
• Use tax is reported on the Massachusetts individual income tax return.
• The Massachusetts Form 1 Instructions include a Use Tax Worksheet and safe harbor method for eligible taxpayers.
• If sales tax was properly collected and paid at the time of purchase, no additional Massachusetts use tax is due.