A new school year is upon us, and some states are celebrating with their annual Sales Tax Holidays.
What is a sales tax holiday and why are they popular?
A sales tax holiday happens when a state waives or reduces sales tax on certain items.
For example, this month 12 states are observing either a Tax-Free Weekend or, in the case of Maryland and Connecticut, a Tax-Free Week.
These states are waiving taxes on school supplies, clothing, textbooks, and even computers. However, each state has its own terms and conditions, so be sure to read up before you go shopping.
These sales tax holidays are popular because they encourage consumers to shop in their local area. This is especially important now because of the damage done to small businesses by the coronavirus pandemic and related shutdowns. Furthermore, American Express reports that for every dollar spent at a local, small business 67 cents of it remains in the community.
How can someone make the most of a state’s sales tax holiday?
Consumers can make the most of a sales tax holiday by informing themselves about what’s included and then stocking up on those items during the holiday. However, keep in mind that each state limits what is exempt from sales tax and has limits on how much of your spending is exempt. Florida, for example, only allows you to exempt clothing, footwear, and various accessories costing $60 or less each and some school supplies that cost less than $15. The closer to those tax exempt limits you get, the more value you’re getting shopping during this time. Keep in mind, however, that some states may still charge you sales tax at the local level.
The following states are celebrating Back to School tax holidays this month:
August 2-4: Missouri
August 7-8: Iowa
August 7-9: Florida, New Mexico, Ohio, Oklahoma, South Carolina, Texas, Virginia
August 9-15: Maryland
August 16-22: Connecticut
August 29-30: Massachusetts
If your state isn’t listed here, its Sales Tax Holiday may have already passed or it doesn’t yet have one. But there’s always next year.