The Massachusetts restaurant tax is a 6.25% state sales tax on prepared meals, plus an optional 0.75% local meals excise that most cities and towns have adopted, bringing the total to 7% in those places. It applies whether you eat in, take out, or have the food delivered, and it covers food trucks and caterers along with traditional restaurants. If you sell meals, you collect the tax from the customer and send it to the Department of Revenue every month.
The Rate: 6.25% State, Plus 0.75% Local Where Adopted
The 6.25% base comes from M.G.L. Chapter 64H, Section 2, which taxes retail sales including restaurant meals.1General Court of Massachusetts. Massachusetts Code Chapter 64H Section 2 Chapter 64L lets any city or town add a 0.75% local meals excise on top.2General Court of Massachusetts. Massachusetts Code Chapter 64L Section 2 – Local Sales Tax Upon Restaurant Meals Where the local option is in place, diners pay 7% on every taxable meal.
On the receipt, the combined charge can appear as a single “state and local tax” line, or the 6.25% and 0.75% can be broken out separately.3Massachusetts Department of Revenue. TIR 09-13: Local Option Sales Tax on Meals and Local Option Room Occupancy Excise Rate Increase The vendor remits both portions to DOR at the same time, and the state routes the local share back to the municipality.
What Counts as a Taxable Meal
A “meal” is any food or beverage prepared for immediate consumption and sold by a restaurant, including dine-in, takeout, and delivery, packaged or not.4Massachusetts Department of Revenue. Sales Tax on Meals Hot sandwiches, salad-bar containers, drinks, and staff-prepared snacks are all in. “Restaurant” is defined broadly: sit-down restaurants, fast-food counters, food trucks, street carts, and caterers all qualify, whether the operation is stationary or mobile.5Massachusetts Department of Revenue. 830 CMR 64H.6.5: Sales Tax on Meals
Grocery items sold in their original packaging are outside the tax. A loaf of bread, a quart of milk, or a pint of ice cream sold sealed or by weight is not a “meal,” even from a restaurant.6Legal Information Institute. 830 CMR 64H.6.5 – Sales Tax On Meals Preparation is the line: once staff heat, combine, or portion something for a customer to eat now, it becomes taxable.
Vending-machine snacks and candy are exempt if the machine stocks only items priced under $3.50.7General Court of Massachusetts. Massachusetts Code Chapter 64H Section 6 The same candy bar sold over a restaurant counter is taxable.
Catering and Delivery
Most catering charges are taxable: food preparation, setup, serving, bartending, cleanup, mandatory insurance surcharges, and even room rentals tied to serving the meal. Separately stated delivery charges can escape the tax, but only if they reflect actual delivery costs and are listed as their own line. Optional add-ons unrelated to the food, like valet parking or live entertainment, are also non-taxable when stated separately.8Massachusetts Department of Revenue. Directive 06-3: Catering Businesses
Tips Versus Service Charges
Voluntary tips a customer leaves are not part of the taxable sales price. A mandatory service charge, such as an automatic gratuity on a large party’s bill, is excluded from tax only if the restaurant distributes the entire charge to service employees, wait staff, or bartenders as required by G.L. c. 149, § 152A. If the house keeps any portion, the full service charge becomes taxable.4Massachusetts Department of Revenue. Sales Tax on Meals This is a common source of errors on banquet and event invoices.
Coupons and Discounts
Massachusetts treats store coupons and manufacturer coupons the same way: the coupon reduces the taxable amount. A $5 coupon on a $25 meal means tax applies to $20, whether the restaurant absorbs the discount or gets reimbursed by a supplier.9Massachusetts Department of Revenue. 830 CMR 64H.1.4: Discounts, Coupons and Rebates That’s different from many states, where a manufacturer coupon doesn’t cut the tax base because a third party makes the seller whole. Operators who work across state lines should not mix the rules up.
Who Doesn’t Pay the Meals Tax
A few categories of buyers and settings are carved out.
- Government agencies and qualifying nonprofits, when they present a Certificate of Exemption (Form ST-2) obtained in advance from DOR.10Massachusetts Department of Revenue. AP 101: Organizations Exempt From Sales Tax
- Meals prepared by hospital or nursing home employees and served to patients or residents in licensed care facilities, exempt under G.L. c. 64H, § 6(cc).11Massachusetts Department of Revenue. TIR 94-6: Meals Tax Exemption for Continuing Care Facilities
- Meals furnished to students by their school. Meals sold to faculty and staff at the same school do not automatically qualify.12Massachusetts Department of Revenue. Letter Ruling 83-101: School Meals Served to Faculty and Staff
The exemption only works if the buyer presents Form ST-2 or an official government payment card at the point of sale. Without it, the vendor has to charge the tax.10Massachusetts Department of Revenue. AP 101: Organizations Exempt From Sales Tax
Registering to Collect the Tax
Before you sell a single meal, register with DOR through MassTaxConnect. Registration requires an EIN, unless you’re a sole proprietor with no employees, in which case your Social Security number is enough. Once approved, DOR mails a Meals, Food and Beverage Registration Certificate for each location. It has to be posted where customers can see it.13Massachusetts Department of Revenue. Register Your Business with MassTaxConnect
Filing and Paying Monthly
Every meal vendor files monthly. There is no small-vendor exception like the one that lets other sales tax filers go quarterly or annually. The return and payment are due by the 20th of the month after the reporting period.14Massachusetts Department of Revenue. 830 CMR 62C.16.2: Sales and Use Tax Returns and Payments
MassTaxConnect accepts ACH debits from a bank account and Visa, MasterCard, Discover, and debit card payments. Credit card payments may carry a processing fee.15Massachusetts Department of Revenue. Making Payments in MassTaxConnect Payment has to land with the return by the 20th, because penalties start the day after.
Penalties and Interest for Missing the Deadline
Late filing and late payment are separate penalties, and they stack.
- Late filing runs 1% of the unpaid tax per month or partial month, capped at 25%.16General Court of Massachusetts. Massachusetts Code Chapter 62C Section 33
- Late payment adds another 1% per month or partial month, also capped at 25%.16General Court of Massachusetts. Massachusetts Code Chapter 62C Section 33
- Interest accrues at the federal short-term rate plus four points, compounding daily, with DOR announcing the rate each quarter.17Legal Information Institute. 830 CMR 62C.33.1 – Interest, Penalties, and Application of Payments
On a $5,000 bill six months overdue, a restaurant that both filed and paid late would owe $300 in late-filing penalties, $300 in late-payment penalties, and daily compounding interest on top. DOR has little discretion to waive any of it without reasonable cause.
Records to Keep
DOR expects meal vendors to keep detailed records of gross receipts, exempt sales, and tax collected for each filing period. Any return can be audited within three years of filing. The window stretches to six years if income was understated by more than 25%, and there is no time limit at all if no return was filed or fraud is suspected.
A practical rule for restaurants is to hold every relevant document for at least six years: sales records, payroll, tip reports, and exemption certificates from tax-exempt buyers. Storage costs almost nothing compared to trying to reconstruct a year of receipts under an audit letter.