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Eligible items are exempt from sales tax this weekend, August 10-11.

Consumers in Massachusetts will not have to pay the 6.25% state sales tax on most retail items this weekend (August 10-11).

On these two days each year, retail items valued at up to $2,500 purchased for personal use in Massachusetts are exempt from sales tax, according to the IRS. Last year, indirect tax revenue was about $3.54 million due to increased economic activity.

“The sales tax-free period is a great opportunity for citizens to get out, support local businesses in their community and do some shopping during a time of year when people are preparing for fall,” Senate President Karen E. Spilka said in a statement.

All retailers must participate in the sales tax-free period if their store is open on weekends and makes taxable sales in the state or to shoppers in Massachusetts.

The tax-free weekend was created in 2018 when Governor Charlie Baker signed the “Grand Bargain” law, which created a permanent sales tax holiday for two days in August – normally a month with low retail sales – to benefit both individuals and small businesses.

“The sales tax exemption provides significant relief to families at a time of year when their checkbooks are already strained by the purchase of school supplies and other family expenses,” Senator Susan L. Moran said in a statement. “It is also an important tool for strengthening our economy, especially for our valued small businesses that often operate on thin margins.”

What qualifies for VAT exemption?

The VAT exemption applies to items purchased by individuals for personal use.

Any items purchased online during the sales tax-free period during Eastern Daylight Time are also subject to sales tax. No sales tax will be charged on the purchase, even if the item is delivered after the holiday weekend.

Consumers can rent items for up to 30 days, but the rental must be paid in full during the vacation.

Articles not subject to VAT exemption

Items purchased by companies or private individuals for business purposes are still subject to tax. Purchases on hire are also not subject to tax.

Other items not subject to VAT exemption include:

• Catering
• Motor vehicles
• Motorboats
• Telecommunications services
• gas
• steam
• Electricity
• Tobacco products
• Marijuana or marijuana products
• Alcoholic beverages
• Any single item priced at more than $2,500

Restrictions on VAT exemption

The tax exemption only applies to items costing $2,500 or less.

Consumers can purchase as many items as they want that individually cost less than $2,500, even if the total price is above that amount. However, if the price of an item exceeds $2,500, that purchase is subject to sales tax.

Clothing items are exempt from sales tax unless the item costs more than $175, in which case only the amount over $175 is taxable.

Consumers who want to avoid the tax on previous purchases may face restrictions.

Individuals cannot cancel and rebook purchases on sales tax weekend if they have already made a deposit, made an advance payment, or otherwise promised payment for an eligible item prior to the weekend.

What happens after the holiday

There is also no tax if you exchange or return an item after your holiday has ended.

If sales tax is accidentally charged on a purchase, the company that charged it is responsible for the refund.

When reporting taxes for the month, individuals must report the sales amount of items purchased on the two days on line 2 of the “Tax-Free Sales” section of the August sales and use tax return.