Massachusetts Should Stop Taxing the Trucks That Deliver Its Goods

A conference committee is deciding whether Massachusetts remains the only New England state that taxes rolling stock at its full sales tax rate, with no exemption and no limit. The House version of the Mass Ready Act would exempt rolling stock (the trucks, tractors, and trailers common carriers use to move goods in interstate commerce) from the 6.25 percent sales and use tax (H.5518, Sections 22A through 22D).1 The Senate version contains no such language.2 The House passed its bill 151 to 0.3 The conferees should keep the House provision and take an easy step toward making Massachusetts more competitive.

Massachusetts is already an outlier

A 2018 state-by-state analysis from the American Transportation Research Institute found that, as of that year, 36 states imposed no sales or use tax on rolling stock.4 Connecticut, Maine, New Hampshire, and Rhode Island all exempt it.5 Vermont taxes heavier trucks but caps the liability at $2,486 per vehicle under 32 V.S.A. § 8903.6 Massachusetts stands alone in New England with the full, uncapped 6.25 percent rate.

Further, the Commonwealth itself exempted rolling stock, a position the Department of Revenue confirmed in a 1980 letter ruling, until the Legislature repealed the exemption in 1996.7 The House provision would just restore the pre-1996 policy.

For clarity, this is how the tax works: on a $160,000 tractor the applicable tax is $10,000 in Massachusetts, $2,486 in Vermont, and zero in the rest of New England.8

This is a tax on a business input, not on final consumption

A tractor-trailer is not a consumer good. It is an input into the delivery of nearly everything Massachusetts households buy. Thoughtful sales tax design should tax final consumption once. Taxing the truck, instead, incorporates 6.25 percent into freight rates, and those higher rates inevitably fold into consumer good prices (grocery, retail, and construction materials).

Directive 23-1 confirms how aggressive the underlying tax is

In March 2023, the Department of Revenue issued Directive 23-1, which formalized a six-day standard for applying the use tax.9 The directive came about while the Department was auditing trucking companies and assessing use tax on rolling stock where no sales tax had been collected at purchase. The directive shows how cumbersome the tax is. Three specific items:

• Rolling stock used or stored in Massachusetts for more than six days in a 12-month period owes use tax on its full purchase price.
• Equipment on a monthly lease receives no de minimis relief at all and is taxable for any month it enters the state.
• The burden of proof rests on the taxpayer, who must produce records such as GPS logs to establish the days of in-state use.

The statute allows a credit for sales or use tax paid to another state. In this region, that credit is nearly worthless because (as mentioned above) Massachusetts’ neighbors do not tax rolling stock in the first place (outside of Vermont’s capped levy). A carrier based in Connecticut or New Hampshire has paid nothing elsewhere to credit and owes the full 6.25 percent here. Finally, the entire six-day framework is administrative. Current law contains no statutory definition of rolling stock; the House provision would supply one.

An exemption represents a growth opportunity

A May 2018 study from the Dukakis Center for Urban Research and Policy at Northeastern University, commissioned by the Transportation Association of Massachusetts, examined the economic consequences of the tax.10 It is the only counterfactual economic modeling of this tax that exists. The authors found that if Massachusetts for-hire trucking had simply grown at the national rate, the state would have had 2,768 more employees and 2,076 more power units (an actual truck or tractor semi-trailer combination), and that those additional operations would generate roughly $15.9 million a year in payroll, income, property, and ancillary sales taxes. Against that, the study modeled roughly $10 million to $12 million in direct annual revenue the Commonwealth would forgo by exempting rolling stock, a range consistent with the $9 million to $13 million in annual collections that industry officials cited in 2019 legislative testimony.11 On the study’s numbers, the exemption is revenue positive: the projected gains exceed the forgone collections.

The Department of Revenue itself does not track collections from this tax. In response to a Pioneer Institute public records request, DOR stated that it “is unable to tell you how much the state collects annually from the sales and use tax on rolling stock, because the DOR has not created such a statistic.” Even if it had, the Department noted, the figure “could not have been broken out from the sales and use tax collected on other tangible personal property; it is all reported on one return.”12 Pioneer separately requested any Department revenue estimate, fiscal analysis, or memorandum concerning the revenue from taxing rolling stock or the revenue effect of exempting it, including any such record transmitted to the Executive Office for Administration and Finance or the House and Senate Committees on Ways and Means. In its initial response, the Department stated that it did not know that such records exist and that it would inquire further.13

Recommendation

The conference committee should retain Sections 22A through 22D and end the rolling stock tax. Massachusetts stands alone in its region because it applies an uncapped tax on a business input that logically increases consumer prices. It does so under an administrative six-day standard, with no statutory definition of rolling stock in current law. The direct revenue is modest and untracked by the Commonwealth itself, while the growth opportunity documented by the Dukakis Center study is meaningful. Restoring the pre-1996 exemption would simply return Massachusetts to its own prior policy and to the settled practice of every other New England state.

This is among the easiest available ways to improve the state’s overall competitiveness.

Sources

1 H.5518, 194th General Court, Sections 22A through 22D (operative text): “Rolling stock”, trucks, tractors and trailers, used by common carriers to transport goods in interstate commerce. (aaa) Sales of rolling stock. (f) Storage, use or other consumption of rolling stock. https://malegislature.gov/Bills/194/H5518.pdf

2 S.3064, 194th General Court (Senate engrossed version), which contains no rolling stock exemption language. https://malegislature.gov/Bills/194/S3064.pdf

3 House roll call on engrossment of S.3064 (as amended by H.5518): 151 YEAS to 0 NAYS, June 17, 2026 (Yea and Nay No. 220). Verified against the official bill history at https://malegislature.gov/Bills/194/S3064 and the roll call at https://malegislature.gov/RollCall/194/HouseRollCall220.pdf.

4 American Transportation Research Institute state-by-state analysis (2018 vintage), published via Overdrive: 36 states imposed no sales or use tax on rolling stock as of 2018. https://img.overdriveonline.com/files/base/randallreilly/all/document/2023/12/Rolling_stock_sales_tax_exemptions_as_of_2018.657b15321d366.pdf

5 Conn. Gen. Stat. § 12-412(70) (https://portal.ct.gov/drs/sales-tax/exemptions-from-sales-and-use-taxes); 36 M.R.S. § 1760(41-A) (https://legislature.maine.gov/legis/statutes/36/title36sec1760.html); R.I. Gen. Laws § 44-18-40 (http://webserver.rilin.state.ri.us/Statutes/TITLE44/44-18/44-18-40.HTM) and 280-RICR-20-70-49 (https://rules.sos.ri.gov/Regulations/part/280-20-70-49); New Hampshire imposes no general sales tax.

6 32 V.S.A. § 8903(a)(2) and (b)(2): the tax is six percent of taxable cost or $2,486.00 per vehicle, whichever is smaller. https://legislature.vermont.gov/statutes/section/32/219/08903

7 Transport Topics, “Mass. Bill to Repeal Rolling Stock Tax Would Aid Trucking Firms” (2022), reporting the 1980 DOR letter ruling and the 1996 repeal (https://www.ttnews.com/articles/mass-bill-repeal-rolling-stock-tax-would-aid-trucking-firms); WBUR, “Tax Bills Stir Soda, Trucking, Aviation Industries” (May 8, 2019), also reporting the 1996 repeal (https://www.wbur.org/news/2019/05/08/tax-state-legislature-soda-aviation-trucking).

8 Derived arithmetic: $160,000 × 0.0625 = $10,000. Labeled as derived.

9 DOR Directive 23-1 (March 23, 2023). Verified operative language: “Where a taxpayer can demonstrate that rolling stock that it owns or leases for 12 months or longer is used or stored in Massachusetts for no more than six days in a 12-month period, the Commissioner will treat the use as de minimis and will not impose, and will not require that the taxpayer pay, use tax on the use of the rolling stock for that period.” Also: “Rolling stock operated under a monthly lease does not qualify for the de minimis use exception.” The burden is on the taxpayer to produce adequate records, such as GPS logs. The directive cites Regency Transportation, Inc. v. Commissioner of Revenue and the credit mechanism of M.G.L. c. 64I, § 7(c). https://www.mass.gov/directive/directive-23-1-use-tax-applied-to-the-sale-of-rolling-stock-de-minimis-standard

10 Robert D. Pritchard and Alex Scott, The Importance of the Trucking Industry to the Massachusetts Economy (Dukakis Center for Urban Research and Policy, Northeastern University, May 2018), prepared for the Transportation Association of Massachusetts, pp. 12, 14. Authors, title, affiliation, the $15.9 million figure (composed of $9.4 million in payroll, income, and property taxes plus $6.5 million in ancillary sales taxes), the 2,768-employee and 2,076-power-unit counterfactual, and the $10 million to $12 million forgone-revenue estimate were verified against the report itself. The report cover reads “Dukakis Center for Urban Research and Policy” and “Trucking Association of Massachusetts”; the center’s current name is the Dukakis Center for Urban and Regional Policy, and the commissioning organization’s current name is the Transportation Association of Massachusetts (masstrucking.org). Commissioned by the Transportation Association of Massachusetts.

11 WBUR (May 8, 2019): industry officials stated at a legislative hearing that DOR collects between $9 million and $13 million a year from the tax, while acknowledging that collection is inconsistent. Advocacy sourced: statement of Transportation Association of Massachusetts officials. https://www.wbur.org/news/2019/05/08/tax-state-legislature-soda-aviation-trucking

12 Massachusetts Department of Revenue response to Pioneer Institute public records request (August 2026): “The DOR is unable to tell you how much the state collects annually from the sales and use tax on rolling stock, because the DOR has not created such a statistic. (Even if the DOR had reason to create such a statistic, this number could not have been broken out from the sales and use tax collected on other tangible personal property; it is all reported on one return.)” On file with the author.

13 Pioneer Institute public records requests to the Massachusetts Department of Revenue (2026). One request sought Department records from January 1, 2022 to the present analyzing the actual or projected revenue effect of Directive 23-1, including any analysis of changes in assessment activity relating to rolling stock. A second sought Department reports, revenue estimates, fiscal analyses, or memoranda from January 1, 2019 to the present concerning revenue attributable to the taxation of rolling stock or the revenue effect of exempting rolling stock from the sales and use tax, including any analysis of Sections 22A through 22D of H.5518 (2026) or S.2082 (2025-2026 session), and including any such record transmitted to the Executive Office for Administration and Finance, the House or Senate Committees on Ways and Means, or the conference committee on S.3064 and H.5518 or its members. In its initial response to each, the Department stated that it did not know what such records exist and that it would inquire further.