Operating a business in Massachusetts requires a solid understanding of the state's tax framework. The base state sales tax rate is 6.25%, with local jurisdictions adding up to 0%. LLC formation costs $500 in 2026.
Economic Nexus in Massachusetts
Remote sellers must collect Massachusetts sales tax if they exceed $100,000 in annual sales within the state. This threshold has been in effect since 2019-10-01. Marketplace facilitators like Amazon and Etsy are also required to collect and remit tax on behalf of third-party sellers. The Massachusetts Department of Revenue enforces these provisions and provides registration guidance at https://www.mass.gov/dor.
LLC Formation in Massachusetts (2026)
Forming an LLC in Massachusetts costs $500 for the initial filing. There is no annual franchise tax, keeping ongoing costs low. The annual report fee is $500. Massachusetts imposes a state income tax, which affects pass-through LLC taxation.
The process involves filing Articles of Organization with the Secretary of State, obtaining a federal EIN, and registering for applicable state tax accounts. You will also need a sales tax permit from the Massachusetts Department of Revenue.
Key Tax Rules
• Massachusetts has a flat 6.25% state sales tax with no local additions.
• Clothing items under $175 are exempt; amounts over $175 are taxed.
• Meals and prepared food are taxed at 6.25% plus optional local 0.75%.
• Economic nexus threshold is $100,000 in annual sales.
Sales Tax Exemptions
The following categories are generally exempt from sales tax in Massachusetts: groceries, clothing under $175, prescription drugs, medical devices. Businesses should maintain proper documentation for exempt transactions.