The economy may be cooling off, but retailers hope that back-to-school shopping remains hot. Despite the pandemic, back-to-school spending has been on the upswing.
According to the National Retail Federation’s annual survey, families with children in elementary school through high school were expected to spend $37.1 billion last year, up from $33.9 billion in 2020. That marks a record high since the survey, which measures how American families shop for clothing, supplies, and other items for the next school year, began in 2003.
With some schools just letting students out, the back-to-school projections aren’t out yet for 2022. But states, understanding that retailers are competing with online sales, are trying to keep shoppers local. One of the ways they do it? Sales tax holidays.
Sales tax holidays are intended to help families save money on essentials. That’s an idea many lawmakers feel they can get behind, while many pundits argue the benefits are too limited to be meaningful.
Sales Tax Holiday History
According to the Tax Foundation, the first sales tax holidays occurred in Ohio and Michigan in 1980, targeting automobile purchases. The idea didn’t really catch on until 1997, when New York introduced a sales tax holiday for clothing to keep shopping dollars inside its borders.
In subsequent years, several states introduced sales tax holidays. Some made them regular features, typically targeting back-to-school shopping. In contrast, others have pulled back, depending on the fill level of their coffers.
Last year, sales tax holidays cost states and local governments more than $550 million in lost revenue—that’s according to an Institute on Taxation and Economic Policy (ITEP) survey of cost estimates from state tax expenditure reports, fiscal notes, revenue departments, and academic studies. Those numbers are up from an estimated $300 million in 2020.
Realistically, that revenue will have to be made up somewhere. While some states—such as California—are reporting an operating surplus, not all states are feeling quite so flush. Eighteen states will hold a sales tax holiday in 2022, one below the record 19 states in 2010.
Sales Tax Holidays Left in 2022
Here’s a look at states’ sales tax holidays for the remainder of 2022, along with exempted items:
Alabama (July 15-17): Clothing priced at $100 or less per item, computers priced up to $750, school supplies priced at $50 or less per item, and books priced at $30 or less per item
Arkansas (Aug. 6-7): Clothing and footwear priced at less than $100 per item, clothing accessories priced at less than $50 per item, and school supplies, art supplies, and school books
Connecticut (Aug. 21-27): Clothing and footwear priced at less than $100 per item, excluding clothing accessories, protective or athletic clothing, and some shoes
Florida (May 14-Aug. 14): Children’s books
Florida (May 28-June 10): Disaster relief items, with exemption by category for items priced $1 to $1,000
Florida (July 1-7): Retail sale of admissions to music events, sporting events, cultural events, specified performances, movies, museums, state parks, and fitness facilities, as well as eligible boating and water activity supplies, camping supplies, fishing supplies, general outdoor supplies, residential pool supplies, and sporting equipment.
Florida (July 1, 2022-June 30, 2023): Children’s diapers, and baby and toddler clothing, apparel, and shoes
Florida (July 1, 2022-June 30, 2023): New Energy Star appliances, including clothes dryers for $1,500 or less, refrigerators or combination refrigerator/freezers for $3,000 or less, washing machines for $1,500 or less, and water heaters for $1,500 or less
Florida (July 1, 2022-June 30, 2024): Impact-resistant doors, impact-resistant garage doors, and impact-resistant windows
Florida (July 25-Aug. 7): Clothing, footwear, and certain accessories with a sales price of $100 or less per item, certain school supplies with a sales price of $50 or less per item, learning aids and jigsaw puzzles with a sales price of $30 or less, personal computers and certain computer-related accessories with a sales price of $1,500 or less
Florida (Sept. 3-9): Tools commonly used by skilled trade workers, including work gloves, toolboxes, work boots, and more—dollar limit varies by type of goods
Illinois (Aug. 5-14): Sales tax due is reduced to 1.25% from 6.25% on qualifying clothing and footwear priced at less than $125 per item and certain school supplies not subject to the $125 threshold.
Iowa (Aug. 5-6): Clothing or footwear priced at $100 or less per item
Maryland (Aug. 14-20): cCertain clothing, footwear, and accessories, including sweaters, shirts, slacks, jeans, dresses, robes, underwear, belts, shoes, and boots priced at $100 or less, and the first $40 of a backpack/bookbag purchase is also tax-exempt
Massachusetts (Date TBA, though legislation was signed into law in 2018 that established an annual sales tax holiday): Most retail items for personal use
Mississippi (July 29-30): School supplies, clothing, and footwear priced at less than $100 per item
Mississippi (Aug. 26-28): Sale of firearms, ammunition, and certain hunting supplies
Missouri (Aug. 5-7): Clothing of $100 or less per item, school supplies of $50 or less per item, computer software of $350 or less, personal computers or computer peripheral devices of $1,500 or less, and graphing calculators of $150 or less
Nevada (Oct. 28-30): Tangible personal property sold to certain Nevada National Guard members and their qualifying dependents living at the same physical address in Nevada
New Mexico (Aug. 5-7): Footwear and clothing priced at less than $100 per item, school supplies priced at less than $30 per item, computers priced at $1,000 or less per item, and computer peripherals priced at $500 or less per item
Ohio (Aug. 5-7): Clothing priced at $75 or less per item, school supplies priced at $20 or less per item, and instructional materials priced at $20 or less per item
Oklahoma (Aug. 5-7): Clothing and footwear priced at less than $100 per item
South Carolina (Aug. 5-7): Clothing, accessories, and back-to-school supplies, backpacks, and computers
Tennessee (July 29-31): Clothing priced at $100 or less per item, computers priced at $1,500 or less, and school and art supplies priced at $100 or less per item
Tennessee (July 1, 2021-June 30, 2022): Gun safes and gun safety devices
Texas (Aug. 5-7): Clothing, footwear, school supplies, and backpacks priced under $100
West Virginia (Aug. 5-8): Clothing priced at $125 or less, school supplies priced at $50 or less, school instruction material priced at $20 or less, laptop and tablet computers priced at $500 or less, and sports equipment priced at $150 or less
The Fine Print
These are general guidelines for state sales tax holidays based on currently available information. As you know, tax can be facts-and-circumstances dependent, so check with your state’s revenue department for more details on what items may be exempt. Also, keep in mind some states offer allow counties and towns the ability to opt out, so some sales taxes may still apply.
Don’t see your state on the list? Five states have no statewide sales tax (Alaska, Delaware, Montana, New Hampshire, and Oregon), while others (such as Vermont and my home state of Pennsylvania) already exempt necessities such as clothing.
This is a regular column from Kelly Phillips Erb, the Taxgirl. Erb offers commentary on the latest in tax news, tax law, and tax policy. Look for Erb’s column every week from Bloomberg Tax and follow her on Twitter at @taxgirl.
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