Revenue worries don't stop states from offering tax holidays

Taxpayers in 16 states will get sales tax breaks on the purchase of various school-related purchases during certain dates in July and August, according to CCH, a Wolters Kluwer business and provider of tax, accounting, and audit information, software, and services. During these tax holidays, back-to-school items such as clothing, footwear, school supplies, computers, and certain other items, depending upon the state, may be purchased free of state sales tax. Local sales taxes may continue to be imposed in some places.

“Despite serious budget constraints, most states are reluctant to cancel their tax holidays,” said Carol Kokinis-Graves, JD, CCH Senior State Tax Analyst.

This year, three states – Florida, Illinois and Maryland – have joined the ranks of states offering a tax holiday timed for back-to-school purchases. In Massachusetts, a back-to-school tax holiday bill has passed the House of Representatives but has not yet been enacted. Only two states offering tax holidays for back to school in 2009 – Georgia and Vermont – have not continued them for this year. However, Vermont did offer a tax holiday earlier in the year.

2010 Back-to-school Holidays

Holidays timed for back-to-school shopping begin as early as July 30 this year. While some limit the exemption to clothes and shoes, others extend exemptions to a wide range of personal items. All place dollar limits on the amount exempt from sales tax, from as little as $10 for school supplies in Florida to as much as $3,500 for computers and computer peripherals in Missouri.

Alabama: On Aug. 6-8, the following are exempt: clothing with a sales price of $100 or less per item; single purchases, with a sales price of $750 or less, of computers, computer software, and school computer equipment; noncommercial purchases of school supplies, school art supplies, and school instructional materials with a sales price of $50 or less per item; noncommercial book purchases with a sales price of $30 or less per book are exempt from tax. The exemption does not apply to clothing accessories or protective or recreational equipment.

Connecticut: On Aug. 15-21, clothing and footwear costing less than $300 per item are exempt. Does not include accessories or athletic or protective clothing.

Florida: On Aug. 13-15, the following are exempt: books, clothing, wallets, or bags (including handbags, backpacks, fanny packs and diaper bags) with a sales price of $50 or less per item; and school supplies with a sales price of $10 or less per item. Excludes briefcase, suitcases, and other garment bags. Also does not apply to sales made within a theme park, entertainment complex, public lodging establishment, or airport.

Georgia: In 2009, the state held sales tax holidays for clothing and school supplies and computers as well as for energy-efficient and water-efficient products. However, the state has not enacted any sales tax holidays for 2010.

Illinois: On Aug. 6-15, footwear and clothing with a sales price of less than $100 per item and school supplies will be exempt.

Iowa: On Aug. 6-7, clothing and footwear with sales price of less than $100 per item are exempt. Does not include accessories, rentals, athletic, or protective clothing.

Louisiana: On Aug. 6-7, the first $2,500 of sales price of noncommercial purchases (not leases) of items of tangible personal property (not vehicles or meals) is exempt. Does not apply to local taxes (may be allowed in St. Charles Parish).

Maryland: On Aug. 8-14, clothing and footwear with a taxable price of $100 or less per item will be exempt. Does not include accessories.

Mississippi: On July 30-31, clothing and footwear with sales price under $100 per item are exempt. Does not include accessories, rentals, skis, swim fins, or skates.

Missouri: On Aug. 6-8, noncommercial purchases of clothing (but not accessories) with taxable value of $100 or less per item; school supplies up to $50 per purchase; computer software with taxable value of $350 or less; computers and computer peripherals up to $3,500 are exempt. Localities may opt out. If less than two percent of a retailer’s merchandise qualifies, the retailer must offer a refund of sales tax paid if the customer requests one, in lieu of the tax holiday.

New Mexico: On Aug. 6-8, footwear and clothing with sales price of less than $100 per item; school supplies; computers with sales price of $1,000 or less per item; and computer peripherals with sales price of $500 or less per item are exempt. Retailers are not required to participate. Does not include accessories, athletic, or protective clothing.

North Carolina: On Aug. 6-8, clothing and school supplies with sales price of $100 or less per item; school instructional materials with sales price of $300 or less per item; sport/recreational equipment with sales price of $50 or less per item; computers with sales price of $3,500 or less; and computer supplies with sales price of $250 or less per item are exempt. Does not include clothing accessories or protective equipment.

Oklahoma: On Aug. 6-8, clothing and footwear with sales price of less than $100 are exempt. Does not include accessories, athletic or protective clothing or rentals.

South Carolina: On Aug. 6-8, clothing (but not rentals), clothing accessories, footwear, school supplies, computers, printers, printer supplies, computer software, bath wash clothes, bed linens, pillows, bath towels, shower curtains, and bath rugs are exempt.

Tennessee: On Aug. 6-8, clothing (but not accessories), school supplies and school art supplies with sales price of $100 or less per item, and computers with sales price of $1,500 or less per item are exempt.

Texas: On Aug. 20-22, clothing, footwear, and school backpacks with sales price of less than $100 per item are exempt. Does not include accessories, athletic or protective clothing, or rentals.

Vermont: On March 6, items of tangible personal property sold to individuals for personal use at a sales price of $2,000 or less were exempt. However, the similar August back-to-school holiday held in previous years was not enacted for 2010.

Virginia: On Aug. 6-8, clothing and footwear with a selling price of $100 or less per item; and school supplies with a selling price of $20 or less per item are exempt.

Holidays for Other Purposes: Energy, Hurricanes, and Firearms

In addition to holidays timed for back-to-school buying, a number of states have enacted tax holidays offered at various times throughout the year to promote other kinds of purchases.

Energy efficiency is the most common theme, with five states offering these types of holidays. Missouri and Texas have already held energy-efficiency holidays, in April and May of this year respectively. North Carolina (Nov. 5-7), Virginia (Oct. 8-11) and West Virginia (Sept. 1-Nov. 30) have such holidays scheduled for this fall. Georgia, which had an energy-related sales tax holiday in 2009, failed to enact one for 2010.

Louisiana and Virginia continued to hold tax holidays for hurricane-preparedness supplies in the spring of this year.

Louisiana , as well as South Carolina, continues to have firearms-related tax holidays. Louisiana’s covers noncommercial firearms, ammunition, and a broad range of hunting supplies (but not the purchase of animals for the use of hunting); it is held each year on the first consecutive Friday through Sunday of September (in 2010, the holiday will be held on Sept. 3-5). South Carolina provides an annual tax holiday for sales of handguns, rifles, and shotguns during what the legislature dubbed “Second Amendment Weekend” – the Friday and Saturday following Thanksgiving (in 2010, the holiday will be held on Nov. 26-27).

 


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