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Tax-Free Weekend in Massachusetts

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Tax-free weekend returns to Massachusetts Aug. 11-12, 2012. During the two-day period, all purchases made in the Commonwealth totaling less than $2,500 will not be subject to state tax, which could mean significant savings in some instances. However, there are some rules and exceptions. Here are some things to keep in mind.

What’s eligible: All single, tangible items costing less than $2,500 and purchased for personal use are eligible under the tax-free promotion. Any items purchased by corporations over the weekend for business use remain taxable items. Alcoholic beverages fall under the tax-free exemption. All sales of motor vehices, boats, meals, gas, and tobacco products do not.

Clothing: There is no state sales tax on clothing unless the cost exceeds $175. In this case, on tax-free weekend, should you purchase an item of clothing exceeding the $2,500 ceiling, you will only be taxed on the cost of the item, minus $175. Mass.gov provides the following example:

“A customer buys a suit on the sales tax holiday for $600. No tax is due. A customer buys a wedding dress on the sales tax holiday for $2,550. Tax is due on $2,375 ($2,550 - $175).”

Multiple items: Because the tax-free exception relates to single items, you will not be taxed on the overall sum of your purchases. Therefore, if you buy a TV for $2,400, a receiver for $800, and a new cell phone for $199, you will still pay no tax over the weekend. However, bundled items sold as one entity (such as a computer, printer, etc.) exceeding $2,500 will not fall under the tax-free benefit.

Coupons: If you’re using a coupon on any eligible item, as long as the price is reduced below the $2,500 threshold, the tax credit is applicable.

Rentals: Because rentals are not seen as “tangible property,” they do not fall under the exception.

Internet sales: As long as the purchase is made during the tax-free weekend, they will not be subject to any additional tax.

For complete rules and regulations, visit www.mass.gov. Wondering where to go? Check out our picks for the best shopping malls in Boston.

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