Gift Certificates and cards are among the most popular presents to give and receive around this time of the year. But don’t pay more for the cards than you have to. DOR is reminding shoppers that gift cards are the same as a gift of cash and are not subject to the 6.25% Massachusetts sales tax. Retailers should not be charging any taxes on these items.
However, in some instances a sales tax may be due when the gift card is redeemed and an item is purchased that is taxable. For example, let’s say you buy a sweater with your $50 gift card, no tax is due, but if you buy a toaster, than the tax will be collected on the sales price. Be aware that the tax only applies to the actual amount that you pay after deducting store discounts or coupons, not the sales price listed on the taxable item.
There are other good things to know about buying and using gift certificates from the Attorney General’s office. Please visit www.mass.gov/ago/consumer-resources/consumer-information/retail-rights/gift-cards-and-certificates/ to learn more.
Happy holidays and smart shopping!