Retail is perhaps the heart and soul of the American economy, as that’s where most people spend a lot of their money. In order to help people loosen up their wallets and get some action going, a number of states have announced tax holidays for “back-to-school” shopping.
Tax holiday in the sun
The past few years have not exactly been the best for the retail sector, as recessions and other bad economic conditions typically induce people to tighten their belts and not spend as much. However, a few states have sporadically announced tax holidays at various times, granting a sales tax exemption for a weekend or whatever period that they designate.
The first, according to CNN, was New York state, which announced a tax holiday in 1997. The state noticed that people were traveling to nearby states that didn’t have sales taxes. However, it didn’t stick and the state wound up canceling its tax holiday and exempting any article of clothing costing $110 or less from sales tax. Today, according to Businessweek, 18 states currently have some sort of tax holiday, and they usually use it for “back to school” shopping weekends.
Brace yourself my dear
According to CNN, back to school sales tax holidays are occurring over the weekend of August 3 to August 5 in 12 states. Those states are Alabama, Arkansas, Florida, Iowa, Louisiana, Missouri, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee and Virginia.
Further tax holidays scheduled for this month include Connecticut from Aug. 19 to Aug. 25, Georgia on Aug. 10 and 11, Maryland’s starts on Aug. 12 to Aug. 18 and a tax holiday in Texas is scheduled for Aug. 17 through Aug. 19.
We’re hunting bargains
The savings can be appreciable. According to CBS, typical savings on a purchase vary, depending on the applicable sales tax native to the state holding the tax holiday, but it typically falls between 4 to 8 percent of the overall purchase. That can really add up; according to Businessweek, it’s estimated that people shopping during the 2011 tax holiday in Oklahoma saved $7 million thanks to the tax break. It may only add up to a bit per shopper, but it’s still like getting a cash advance from the state.
However, the exemption varies by state. For instance, according to CNN, Alabama exempts clothing items up to $100 in value per item, computers and software up to $700, school supplies up to $50 and books up to $30. Florida is only exempting clothes and school supplies and Connecticut’s upcoming sales tax holiday only gives shoppers a break on clothing and footwear.
Shoppers should check the appropriate state laws to see just what is getting exempted. They should also, according to CBS, look at any county or local laws to see if there’s a local sales tax that might apply.