Massachusetts sits on the Atlantic coast in the northeastern United States and is part of New England. The Bay State covers a good 27,000 km² and is home to just under seven million people. Its capital, Boston, is the most populous urban center in New England.
Asked whether they would choose Massachusetts again, more than three quarters of the companies surveyed said yes. 64 percent rated it a "good" or "very good" place to do business (according to a MassEcon study). An exceptionally strong workforce, first-class industry ecosystems and a range of other advantages drive its economic competitiveness. The state consistently ranks at or near the top for innovation and for the competitiveness of its knowledge economy. Greater Boston is known as a powerful economic engine, one of the strongest in the country.
A world-class workforce
It is the workers, with their deep knowledge, technical skills and excellent education, who draw companies to Massachusetts and keep them there. The talent pool of nearly 3.8 million people earns the state a string of first places nationwide. Massachusetts has the highest share of residents with a college degree and the best science and technology workforce, and its employees help make it the most innovative state in the US. Close partnerships with R&D institutions and regional universities give the Bay State a further edge.
In a study by MassEcon, more than 90 percent of respondents said the availability and quality of the workforce mattered in choosing their location, and 76 percent called the local talent pool one of Massachusetts' strengths.
A stronghold for foreign direct investment
More than 1,000 international companies have set up in Massachusetts and run their business from here. Their investment grows the local economy and creates high-quality jobs. In 2018, nearly 230,000 residents worked for international companies that had moved to the state, an increase of almost 13 percent since 2013. Close to a third of these jobs are in manufacturing.
A diverse range of key industries
Boston is the hub of the Massachusetts biotech industry. The city and neighboring Cambridge are home to almost a thousand biotech companies, partly thanks to the many nearby universities working in the field. Renowned institutions include the Whitehead Institute for Biomedical Research and the Wyss Institute for Biologically Inspired Engineering.
In engineering, too, the state benefits from its many educational institutions and engineering schools. Well-trained, highly specialized workers are key to its shared success in engineering. Top institutions include the Massachusetts Institute of Technology (MIT), the Franklin W. Olin College of Engineering, the Wentworth Institute of Technology and universities such as Harvard, Boston and Tufts.
IT is also a major industry in the Bay State, with around 1,700 organizations active in the sector. Examples include Bloomer Health Tech and the Health Data Analytics Institute.
Income tax in Massachusetts
Massachusetts levies an income tax of 5%; since 2023, income above roughly $1 million has carried an additional 4% surtax. On top of that, you pay federal income tax.
Corporate tax in Massachusetts
Massachusetts levies a corporate tax of 8%. On top of that, you pay federal corporate tax.
Sales tax in Massachusetts
The USA has no VAT on the European model. Instead, states, counties and municipalities levy a local sales tax on the sale of goods (but not services).
Sales tax rate in Massachusetts
The Massachusetts sales tax is 6.25% at state level. Cities and counties do not levy sales tax.
Massachusetts nexus laws & sales tax
Learn more about economic nexus laws and sales tax.
Effective date
October 1, 2019
Included transactions:
Sales of tangible personal property and services
Treatment of exempt sales:
Exempt sales and exempt services count toward the threshold
Trigger:
Sales only
Sales/transaction threshold:
$100,000
Evaluation period:
The threshold applies to the previous or current tax year
Additional information:
- The Department of Revenue repealed the cookie nexus rule
- Registration requirements: Massachusetts requires a remote seller to register by the first day of the first month, to collect and remit sales tax, starting two months after the month in which the threshold was exceeded. Different rules may apply to businesses that exceeded the threshold in 2019. For more information, see 830 CMR 64H.1.9.
- Remote seller FAQs
- Bill H.4000
Massachusetts marketplace sellers & sales tax
Learn more about registration requirements for marketplace sellers
Effective date for marketplace facilitators:
October 1, 2019
Economic nexus threshold:
More than $100,000 in taxable or exempt sales of tangible personal property or services in Massachusetts in the current or previous tax year. When calculating the threshold:
- Remote sellers should exclude sales made through a collecting marketplace
- Marketplace facilitators should include all sales made through the marketplace
Registration requirements:
- Remote multichannel sellers: Once you exceed the economic nexus threshold, you must register with the Massachusetts Department of Revenue (DOR) and collect Massachusetts sales tax on sales not taxed by a marketplace facilitator.
- Remote marketplace sellers: You may need to register with the DOR once you exceed the economic nexus threshold. Contact the DOR for more information.
In-state multichannel sellers: You must register with the DOR and collect tax on sales not taxed by a marketplace facilitator.
In-state marketplace sellers: You may need to register. Contact the DOR for more information.
Learn more here.
You will find more locations in our overview of US states, and help choosing a legal form in our article on the US Corporation.
Our services for Massachusetts:
Want to do business in Massachusetts? Find the right legal form and state of incorporation in our overview of US company formation, and let's go through your plans together in a consultation.