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Massachusetts taxes most income at a flat 5%, adds a 4% surtax on taxable income above an annually indexed threshold, and charges 6.25% sales and use tax statewide. Meals run 6.25% plus a local option, room occupancy starts at 5.7%, and the motor vehicle excise bills $25 per $1,000 of value each year.
“My Boston restaurant bill shows 7%. I thought sales tax was 6.25?”
“My paycheck withholds 5, but my accountant says my top rate is 9. Which is it?”
“Why did my town send me an excise bill for a car I already paid sales tax on?”
Every Massachusetts rate that touches your wallet, on one page. The table carries the numbers; the sections after it explain the rows people misread most, and every figure that indexes or varies is marked as such.
The rates themselves are boring by design, most have not moved in years. What moves is everything around them: the surtax threshold indexes annually, towns adopt and adjust local options, and the exemption lines decide what the rates even touch. That is where this page earns its bookmark.
The Massachusetts Rate Table
| Tax | Rate | What It Applies To |
| Personal income | 5% | Most taxable income: wages, business income, interest, dividends, long-term gains |
| Income surtax | +4% | Only the slice of taxable income above $1,107,750, a threshold indexed annually |
| Short-term capital gains | 8.5% | Gains on assets held one year or less |
| Sales and use | 6.25% | Taxable goods statewide, no local add-ons; use tax mirrors it on untaxed purchases |
| Meals | 6.25% + up to 0.75% | Restaurant and prepared food, with the local option most cities adopt |
| Room occupancy | 5.7% + local | Hotels, motels, and short-term rentals, with local options stacking on the state rate |
| Motor vehicle excise | $25 per $1,000 | The annual town bill on a vehicle’s depreciating valuation, separate from sales tax |
| Estate | Graduated | Estates above the $2 million filing threshold, on Massachusetts-specific rules |
| Gasoline | 24 cents per gallon | Built into the pump price, alongside the federal excise |
| Cigarettes | $3.51 per pack | Plus sales tax on the purchase |
| Marijuana | 10.75% + 6.25% + up to 3% | State excise, sales tax, and the local option, stacked |
| Alcohol (store sales) | Excise only | Per-gallon excise at the wholesale level; package-store purchases carry no sales tax |
| Measurement | Two receipts, many bills | Only sales and meals arrive on a register receipt; the rest ride returns, registrations, closings, and town bills. The surtax is marginal: only the slice above the threshold pays it. |
Reading the Income Rows: Flat, Then a Marginal Surtax
The paycheck question has a precise answer: both numbers are right. The base rate is a flat 5%, and per the DOR’s surtax guidance, taxable income above the indexed threshold pays an additional 4%, making the top marginal rate 9%.
Marginal is the word doing the work. A taxpayer with $1,300,000 of taxable income pays the extra 4% only on the roughly $192,000 above the threshold, about $7,700, not 9% on the whole year.
Short-term gains run their own lane at 8.5%, and a large short-term gain above the threshold reaches 12.5%. Timing a sale across the one-year holding line is one of the few rate choices a taxpayer actually controls.
Withholding is where the two income rows collide in real life. Paychecks withhold at the flat rate, so a surtax-level year, a business sale, a large bonus, a one-time gain, usually needs estimated payments to avoid an April surprise plus underpayment interest.
The threshold is also per year, not per event. Two gains of $700,000 in separate years each stay under the line; the same $1.4 million landing in one year puts a slice into surtax territory, which is why the timing conversation happens before the sale closes, not after.
Reading the Sales Rows: One Rate, Real Exemptions
The 6.25% is the state’s most visible rate and its most uniform: no local add-ons, the same in every town, with a matching use tax behind it. The full system, exemptions, vendors, and filing, lives in the complete Massachusetts sales and use tax guide.
The exemptions are where receipts change: groceries ride free, and clothing is exempt to $175 per item with only the excess taxed. Cars have no exemption at all, and the vehicle rules add valuation twists that surprise private-sale buyers.
The use tax deserves its one-sentence reminder here: the 6.25% follows taxable items home. A tax-free purchase over the New Hampshire line or from an uncollecting online seller still owes the same rate by self-report, which is the rule that keeps the border from being a discount.
Reading the Meals and Occupancy Rows: Where Local Options Live
The 7% restaurant bill is the meals tax at work: 6.25% state plus the 0.75% local option most cities and towns have adopted. It is a separate tax from sales tax, with its own filing and its own audit lane: [INTERNAL LINK NEEDED: Massachusetts Meals Tax pillar (Cluster 2)].
Room occupancy stacks the same way, 5.7% state plus local options, and short-term rentals joined the regime with their own registration rules. The stacking is why two hotel bills a town apart can differ.
Both are vendor-filed taxes. The restaurant and the host collect and remit; the diner and the guest just see the line. For operators, that means the same trust-fund treatment and filing rhythm the sales tax carries, with the local option tracked town by town.
Reading the Excise Rows: The Bills That Are Not Receipts
The motor vehicle excise answers the double-tax question: the 6.25% at purchase was sales tax, once; the $25 per $1,000 from your town is an annual excise on the vehicle’s depreciating valuation, every year you register it. Different tax, different collector, both real.
The excise has its own relief valve worth knowing: sell or junk the car mid-year, or move out of the municipality, and an abatement can return the unused months. The bill assumes a full year; the paperwork corrects it, but only if filed.
Gasoline, cigarettes, marijuana, and alcohol carry excises built into or stacked onto the price. Alcohol is the odd one: package-store purchases carry no sales tax at all, with the per-gallon excise doing the taxing upstream, while the same drink with dinner rides the meals tax.
Marijuana shows the stacking at full strength: 10.75% state excise, 6.25% sales tax, and up to 3% local, roughly a fifth of the price in tax where the local option runs. It is the steepest register experience in the state.
The estate row is the quiet one until it is not. Estates above the $2 million filing threshold file under Massachusetts-specific rules that do not mirror the federal system, and the planning around that line, gifting, titling, and timing, is its own discipline best started early.
The Numbers Behind the Table
- 5% and 9%: the base income rate and the top marginal rate once the surtax applies.
- $1,107,750: the surtax threshold, indexed annually, and marginal rather than a cliff.
- 6.25%: sales, use, and the state share of meals, one number in three roles.
- 0.75% and 3%: the local options on meals and marijuana that make bills vary by town.
- $25 per $1,000: the annual motor vehicle excise, billed by the municipality.
- 2: the taxes that show up on register receipts; everything else arrives as a return or a bill.
Common Mistakes With Massachusetts Rates
- Reading the surtax as a cliff and panicking a dollar over the threshold.
- Blaming the restaurant for a 7% line that is simply the meals tax working.
- Treating the motor vehicle excise as a billing error because sales tax was already paid.
- Assuming a local sales tax exists somewhere; the 6.25% never varies by town.
- Forgetting short-term gains run at 8.5% when timing a sale.
- Quoting last year’s surtax threshold; the figure indexes every year.
One Page of Rates, One Firm Behind It
Rates are the easy part; the thresholds, local options, and filings around them are where money actually moves. The full rate list is maintained on the DOR’s rates page, and this page updates as thresholds index. When a figure here matters to a real decision, a sale, a move, a filing, verify it against the current DOR figure for the year in question, because the indexed numbers are the ones that drift.
Ed Parsons CPA works the business side of this table daily, sales, use, and meals compliance under the Massachusetts sales and use tax service, and when a DOR notice has already turned a rate into an assessment, the Business CPA Tax Resolution Case Analysis prices the exposure before anything gets paid.
