You're Giving Away Money By Shopping Before This Weekend
Every year around this time, states host sales-tax holidays, in which the usual sales tax is waived on a wide range of purchases. In most cases, tax-free purchases are limited to back-to-school items such as computers and traditional school supplies like notebooks, protractors, and pens, but clothing, footwear, and accessories are typically on the table as well.
What's more, the tax is waived on online purchases as well as sales in traditional brick-and-mortar stores, and there's no actual requirement that the items being purchased are for back-to-school prep, or even for kids. It would be too hard to police any such requirement, so instead most states simply limit purchases to a flat dollar amount—for instance, any article of clothing priced at $100 or less, typically.
Let's be honest: The savings represented by these events isn't all that spectacular. Most participating states have sales tax rates of 4% to 6%, so that's the extent of the savings. Big whoop, you might say. But when the tax holiday is combined with terrific sale prices—and virtually every retailer has back-to-school promotions going on right about now—the net amounts paid by shoppers can be true bargains. Why not get an extra 5% or whatever off what is already a good deal, on stuff you absolutely need to buy? To do so, all you have to do is wait a few days.
There are those who say that sales tax holidays are gimmicks for exactly the reason hinted at above. The argument is that the holidays don't promote more spending as much as they encourage shoppers to strategically postpone spending, with no net increase in purchases whatsoever. What's more, while sales tax holidays play well in terms of politics, critics say they are questionable at best in terms of local economic stimulus, and that they cost states and municipalities millions in much-needed revenues. States such as North Carolina have dropped their annual sales tax holiday tradition because of this argument, though shoppers did still get to take advantage of a "Better Than Tax Free" sales event at a North Carolina outlet mall last weekend.
Gimmick or not, if you need to buy any of the many, many items eligible for tax-free purchase, you might as well wait until Friday, or whenever your state has its sales tax holiday. Failure to do so is tantamount to unnecessarily paying an extra 6% or so.
Resources including Bankrate and the Federal Tax Administrators site list the basic details, and below are the states with sales tax holidays starting this weekend. Check the links for all of the fine print about what is and isn't included in your neck of the woods.
Alabama: August 1-3, limited to $30 per book, $50 for school supplies, $100 on clothing, and $750 on computers
Florida: August 1-3, limited to school supplies of $15 or less, $100 per clothing article, and $750 for computers and accessories
Georgia: August 1-2, limited to $20 school supplies, clothing priced at $100 or less, and computers capped at $1,000
Iowa: August 1-2, limited to footwear and clothing priced up to $100
Louisiana: August 1-2, sales tax is waived on purchases of all items for personal (rather than business) use, priced up to $2,500.
Missouri: August 1-3, limited to school supplies of $50 per purchase, clothing and footwear priced up to $100 each, computer software up to $350, and computers or accessories up to $3,500
New Mexico: August 1-3, limited to school supplies up to $30 per item, clothing and footwear up to $100, computer hardware up to $500, and computers up to $1,000
Oklahoma: August 1-3, limited to clothing and footwear up to $100 per item
South Carolina: August 1-3, with sales tax exemptions for all clothing, footwear, school supplies, computers and electronics, college dorm supplies like pillows, blankets, and shower curtains, and even delivery charges on all of the above
Tennessee: August 1-3, limited to clothing, footwear, school and art supplies priced up to $100 each, as well as computers up to $1,500
Virginia: August 1-3, limited to school supplies up to $20, and clothing and footwear of $100 or less per item
And here are a few more states offering tax holidays a little later this summer:
Texas: August 8-10, limited to clothing, footwear, backpacks, and school supplies up to $100
Maryland: August 10-16, limited to clothing and footwear priced up to $100
Connecticut: August 17-23, limited to $300 on clothing and footwear
Massachusetts: Lawmakers in the Bay State have promised shoppers will get a tax-free weekend sometime in August, but they haven't gotten around to settling on a date yet.