August and September may soon be the ideal time to go shopping in Massachusetts. Governor Charlie Baker’s administration recently introduced legislation to establish a Sales Tax Holiday during these months. This plan would be an expansion of the existing tax-free weekend, which takes place in mid-August each year and was also signed into law by Governor Baker in 2018.
The Goal Behind Massachusetts Sales Tax Holiday
The goal behind this measure is to support local businesses and stimulate economic growth in the aftermath of the COVID-19 pandemic. Government spokespeople have expressed the need to take action now to ensure that Massachusetts continues to move toward full economic recovery.
Massachusetts Sale and Capital Gain Tax Creates Financial Buffer
So far this year, Massachusetts state tax revenue has exceeded expectations by 14.9%, providing the Commonwealth with enough surplus to increase their Stabilization Fund, a mechanism governments use to create a financial buffer for unforeseen needs. Due to higher-than-anticipated capital gains tax revenue, the state collected an extra $3.938 billion. The current balance for the Stabilization Fund is higher than it was at the beginning of the pandemic and almost four times as much as it was when the Baker administration took office in 2015.
This sales tax holiday proposal continues the trend of recent legal changes aimed at boosting small businesses. As business owners take advantage of these benefits, they may see substantial growth in the coming years, making this a prime time to keep an eye out for up-and-coming investment opportunities. Small businesses that decide to go public can offer investors special tax advantages.
Massachusetts Qualified Small Business Stock Conformity
Qualified small business stock (QSBS), for instance, can be sold without incurring federal capital gains tax. Many states also offer tax benefits for QSBS. Currently, Massachusetts largely mimics the federal section 1202 tax exclusion, with some modifications. To learn more about QSBS benefits on a state level, visit our QSBS Rules by State webpage.
This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.