Sales Tax Holiday in Massachusetts This Summer? Or Not?

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By Matt Murphy

The “grand bargain” law signed by Governor Charlie Baker last week makes a summer sales tax holiday a permanent annual fixture on the calendars of shoppers and business owners in Massachusetts.

But most of the new law, including the brief August respite from the state’s 6.25 percent sales tax, doesn’t kick in until January 2019.

So what about this summer?

If there is to be a sales tax holiday this August, the Legislature must first agree to it, and schedule the weekend.

House Speaker Robert DeLeo’s office declined to comment when asked whether the House would take up legislation this month to designate one weekend in August as sales-tax-free. However, with elections approaching, tax receipts pouring in well above estimates, and lawmakers having just signed off on a permanent sales tax holiday, it would be surprising if the Legislature did not give consumers a break next month with a weekend that typically costs the state a little over $20 million.

One possibility is that a sales tax holiday could be added to an economic development bill that the Legislature is expected to consider in the closing weeks of the session. The legislation passed through the Committee on Economic Development and Emerging Technologies without addressing the sales tax holiday that Governor Baker had included in his version of the bill.

At that time, the concept of a permanent sales tax holiday was still the subject of negotiations between legislators and interest groups hoping to strike a compromise law addressing the minimum wage, paid family leave, and a sales tax reduction.

A sales tax reduction, which Baker says he supports, was not part of the grand bargain law that spurred proponents of minimum wage, paid leave, and sales tax cut ballot questions to abandon those efforts. The law calls for the minimum wage to rise from $11 to $15 over five years and for a new $800 million paid family and medical leave program supported by a payroll tax.

Starting in 2019, the Legislature will have until June 15 to pick a weekend in August to hold the sales tax holiday. If lawmakers miss that deadline, the commissioner of the Department of Revenue by July 1 must set the dates.