What You Need to Know About Back to School and Sales Tax Holidays

Tax Planning

It seemed like just yesterday we were navigating graduation ceremonies but the new school year is just about upon us.

If you’re the parent to little ones going back to school, you’re probably thinking about all the money you’ll have to spend on various supplies.

Fortunately, now that it’s time to consider your back to school shopping, it’s also time to check the dates of your state’s local sales tax holidays, if available.

With a little planning, it’s possible to save a decent sum in sales tax when you shop for the right items at the right time of year.

What Is a Sales Tax Holiday?
A sales tax holiday is a number of days when the state doesn’t collect sales tax on a category of items.

Back to school time is a popular time for states to offer sales tax holidays.

Energy efficient items and clothing are two popular categories that are commonly tax free on these sales tax holidays.

The hope is that the holiday will prompt more people to buy in the state and boost the economy.

Not only that, but there are usually hopes that shoppers will spend on items not covered by the sales tax holiday and provide a bit of a revenue boost.

Most sales tax holidays that focus on back to school are limited, however. You might only be able to get a break on the tax paid on certain items, such as clothing, computers, or basic school supplies.

Most of these holidays only take place during a weekend. For example, Georgia has a back to school sales tax holiday, but you can only take advantage of it if you shop August 1 and August 2 of 2014.

Alabama holds their “Back-to-School” sales tax holiday on August 1st through August 3rd, 2014.

You also need to be aware of limits on certain items. You might only get a break on school supplies up to $30, or a tax break of up to $100 on clothing.

Once you hit those limits, you will have to pay the extra sales tax. Luckily, most states cap computers at a higher dollar limit, usually between $750 and $3,500.

There are a lot of rules to remember but if you are having trouble, you can always ask the retailer. Chances are they know the exact rules and regulations for the tax holiday.

Should You Drive to Another State?
If you live near the border of a state that offers a sales tax holiday, it might make sense to drive over the border and take advantage of the savings.

However, before you go, consider the cost of gas and other expenses that might be related to your trip.

If it’s going to cost you more to get there and back, the sales tax savings might not be worth it.

However, there might be other considerations as well. If the sales are better in the next state, plus you get the sales tax holiday, the drive might become worth the trouble.

Compare spending money on gas to drive to the next state to avoid taxes to staying in your state and paying taxes to estimate the effectiveness of the savings you are likely to experience with a tax holiday.

It’s also worth noting that there are usually other sales tax holidays, other than just back to school, depending on the state.

TaxAdmin.org offers a list of sales tax holidays that take place throughout the year, so it makes it easier for you to plan your shopping.

With your shopping list, and a knowledge of what’s eligible for a sales tax holiday, it’s usually possible to save as much as hundreds of dollars on your back to school shopping.

Look for sales, good deals, and try to time your purchases so that they will qualify for favorable sales tax treatment.

Happy shopping!

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