This weekend 11 states are holding "sales tax holidays." And a total of 16 are doing so this back-to-school season. It can be great fun to shop 'til you drop knowing that the math you do in your head as you're stuffing your cart with merchandise won't change at the register when you're forced to "tip" the tax man. Lawmakers invented these tax-free holidays about a decade ago, as a way of cutting a break to families and –make no mistake–also stimulating their local economies. Here are the states offering sales tax holidays this year, the dates of the holidays, and the amount of sales tax they normally charge that you'll be avoiding. For more details, such as the types of items eligible and price limits, click on a state to go to its own tax information page. (Keep in mind that sometimes cities or counties charge sales tax and their levy may or may not be waived during the state holiday.):
STATE: DATE: RATE:
Alabama August 5-7 4%
Arkansas August 6-7 6%
Connecticut Aug. 21-27 6%
Florida Aug. 12-14 6%
Iowa Aug. 5-6 6%
Louisiana Aug. 5-6 4%
Maryland Aug. 14-20 6%
Mississippi July 29-30 7%
Missouri Aug. 5-7 4.225%
New Mexico Aug. 5-7 5.125
New York 4/1/11-3/31/12 4%
North Carolina Aug. 5-7 5.75%
Oklahoma Aug. 5-7 4.5%
South Carolina Aug. 5-7 6%
Tennessee Aug. 5-7 7%
Texas Aug. 19-21 6.25%
Virginia Aug. 5-7 5%
Combine Tax Discount with Other Offers
The real key to bagging great bargains during a sales tax holiday is not to rely on just the tax-free discount alone. After all, we savvy shoppers usually get excited about discounts of, say, 40% and up. As you can see from the chart above, sales taxes in the states offering holidays range from 4% to 7%, which is not exactly in the brag-to-everyone-on-the-block range. So be sure to look for great store sales and manufacturer coupons to go along with your sales tax savings. If your state doesn't allow you to combine coupons with tax-free savings, then check for other promotions like "Early Bird" shopping hours that may give you a way of doubling down on your discount.
Advanced Savings Strategies
Many states impose dollar limits on the merchandise you can buy tax free. That's not as bad as it sounds and here's why. Often the rule is that any one item cannot cost more than, say, $100. BUT that doesn't mean your entire shopping trip can't go over $100. The limit applies to each individual item, not your entire bill. This detail should be programmed into the register, but if you encounter a problem, try making multiple trips to the register or having your spouse and kids all get in line and pay separately.
The other thing to know is that some states are more generous about what counts as "back-to-school" shopping. Yes, these holidays were initially designed to cut people a break on those shiny new shoes and itchy first-day-of school clothes plus books and binders. But these days many states extend the discount much further. For example, North Carolina allows the purchase of up to $3,500 in computers and accessories. Louisiana waives the sales tax on $2,500 worth of personal property, which could include big ticket items like furniture. A handful of states waive the sales tax on things such as hurricane preparedness products and Energy Star appliances. Naturally, the modest discount of not paying sales tax is more exciting when applied to a high-dollar item. Check your state's policy by clicking on it in the chart above.
Permanent Sales Tax Holidays
If the idea of sticking it to the tax man appeals to you, and you're up for a road trip, don't limit yourself to the states with brief tax holidays. There are five states in the US that NEVER charge sales tax. If you live in or near one of them, you're probably well aware of this, but for lucky folks vacationing near one of these spots, it's nice to know. The five states are:
o New Hampshire
Use Caution Spending Money to Save Money
Finally, just as some people are nutty enough to drive miles out of their way for cheaper gasoline, don't make the mistake of road tripping so far for tax-free goods that your car eats up your savings. Gas prices have come down from their early summer high, but fuel is still pricey. Let's say you live in Columbia, South Carolina and you want to drive to Raleigh, North Carolina, to take advantage of the tax holiday. Here's the math.
o That's 450 miles round trip.
o Let's say you pay $3.70 a gallon to gas up your car.
o And that it gets 30 miles to the gallon.
o You'll pay at total of $55.50 for fuel.
At that rate, you'd have to buy $965 worth of merchandise tax-free to break even! If you're planning to use North Carolina's generous tax exemption to buy a computer, might be worth it. But for peechee folders and pens, not so much.
On the other hand, if you live near a state border or in one of the East Coast states where everything is near everything else, it's a much easier sell. Me, I live in the District of Columbia, which is skipping its tax holiday this year because revenue is low. But Maryland and Virginia are both less than five miles from my house and they're both waiving taxes in the coming days and weeks. See you at the mall!