How much sales tax do I charge on meals in Massachusetts?
Massachusetts charges 6.25 percent sales tax on restaurant meals at the state level. Many cities and towns add a local meals excise tax of up to 0.75 percent on top of that. In areas with the local tax, you’ll collect 7 percent total.
The local meals excise is optional for each municipality to adopt. Boston, Worcester, Cambridge, Springfield, and many other cities have adopted it. If your restaurant is in one of these areas, you need to know your local rate and collect accordingly. The Massachusetts Department of Revenue publishes a list of communities that have adopted the local meals excise, so check before you set your rates.
What counts as a taxable meal? Prepared food served by a restaurant, cafe, food truck, bar, or catering business is taxable. Take-out food is also taxable if it’s prepared. The distinction is between food sold ready to eat and unprepared groceries. A sandwich from your deli counter is taxable. A loaf of bread the customer takes home to make their own sandwich is not. This applies whether customers eat in or take their food to go.
Restaurants need to register as a meals tax vendor with the Massachusetts Department of Revenue. This registration is separate from regular sales tax registration. You’ll file meals tax returns on a schedule based on your sales volume, typically monthly or quarterly. Keeping up with sales tax filings and deadlines can be a hassle, especially when you’re running a busy kitchen.
Setting up your point of sale system correctly matters. You need to charge the right combined rate for your location and track meals tax separately in your books. If you’re in a city with the local excise, your POS should be charging 7 percent on meals. If you’re in a town without the local tax, it’s 6.25 percent. Getting this wrong means either overcharging customers or owing money you didn’t collect.
Smart Outsourced Solutions provides bookkeeping and tax services for restaurants across Massachusetts and New England. Simona Leppala is a CPA and Enrolled Agent who can help you stay on top of your meals tax obligations and keep your books accurate. If you have questions about your specific situation, reach out for a consultation.
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