After going to massage therapy school, obtaining a license to practice and finally setting up shop, the last thing many massage therapists want to think about is paying the government sales tax. There is no doubt that massage therapists provide an extremely valuable service, but states frequently disagree on the taxability of massage.
Before you find yourself receiving a notification from your local or state treasury requesting sales tax revenue from previous years, make sure you know all about the fiscal laws that apply to your massage therapy business!
A majority of massage therapists do not need to charge their clients sales tax. However, some local and state governments place massage therapy in a taxable category – typically considering it to be a personal or luxury service. The list below is not an absolute guide of where massage therapy is taxable; rather it is a representation of the tax laws in certain U.S. states and municipalities where a massage therapist might be responsible for collecting sales tax. It is always important for therapists to thoroughly review the tax laws in every location they practice, recognizing that laws are continually evolving and may contain crucial loopholes.
Depending on several details, practicing massage therapy in the following five places may require the inclusion of sales tax in your fee:
- Ohio – As of August 1, 2001, the state of Ohio expanded the scope of massage therapy to include tax collection. Ohio Governor Bob Taft signed House Bill 95 into law, which increased the state’s sales tax base to 6 percent and expanded its provisions to include massage therapy. However, massage therapy performed and/or prescribed by a physician is exempt from sales tax collection. Additionally, therapists are required to remit taxes monthly, quarterly or semi-annually depending on their circumstances, and are strongly encouraged to maintain business records documenting which clients are exempt from paying the tax.
- New Jersey – Effective October 1, 2006, sales tax applies to massage, bodywork, and somatic services that are rendered in New Jersey. If a medical doctor, doctor of osteopathy, dentist, acupuncturist, chiropractor, physical therapist, registered nurse, podiatrist or certified midwife administers massage therapy within the scope of their license, sales tax collection is not required. Similar to the law in Ohio, a doctor’s prescription may be an exemption. A prescription for massage therapy must be written by a licensed medical doctor, osteopath, chiropractor, podiatrist, dentist or psychologist with a doctorate in psychology for a patient for whom the medical doctor, osteopath, chiropractor, podiatrist, psychologist or dentist is providing treatment or consultation services within the scope of his or her license.
- Minnesota – In Minnesota, a massage therapist who performs services that are not for the purpose of treatment of an illness, injury or disease is subject to sales tax but is not liable for MinnesotaCare tax. If the massage is provided as a treatment for an illness, injury or disease it is subject to MinnesotaCare tax.
- New York City – Massage therapy, even if administered by a licensed massage therapist under Title VIII of the Education Law, is taxable at the rate of 4.5 percent. Massage by a physician, physiotherapist or chiropractor, etc., who is performing these services for medical reasons, is not taxable. There is no sales tax on massage therapy when performed in New York State outside the limits of New York City.
- Connecticut – As long as you are a licensed massage therapist, massage therapy is not taxed in Connecticut. Although, massage therapy administered by someone other than a licensed massage therapist has been taxed since 1991.
While a majority of places in the U.S. do not consider massage therapy to be a taxable service, several do include it in their government’s collections. If you are not already familiar with the tax laws in your state and municipality, make sure you review them thoroughly. Being properly informed will help you avoid a potentially costly situation where a tax collector delivers a request for previously uncollected sales tax.