Tax-free holidays are holidays, typically oriented around the start of the school year, intended to help parents save money on school supplies by removing the burden of sales tax. Here’s what you need to know.
Which States Have Tax-Free Holidays
There are only 17 states that participate in tax-free school shopping days, which means you may not have even heard of this. However, if you live in one of those areas, you’ll want to know how to get the best out of this tax break.
First, here are the states that participate:
- New Mexico
- South Carolina
Each state has its tax-free school shopping days at a different time of the year, some of them revolving around back-to-school shopping.
It also helps to keep in mind that some states don’t have state sales tax at all.
What Tax-free Holidays Save You
Not only do dates vary by state, what you can save money on during tax-free time also varies with each state. Depending on where you live, here are some of the things covered during this bargain shopping time:
- Clothing – Alabama, Florida, Iowa, and Mississippi are a few of the states which allow for tax-free clothing shopping. In some states, there may be specific qualifiers for the clothing in terms of type or price.
- Computers and Computer Supplies – Computers are one of the big-ticket items that may make it worthwhile to participate in tax-free holidays.
- School Supplies – Since these are tax-free “school” shopping days, it makes sense that at least some of the states would offer no tax on school supplies.
- Textbooks – Textbooks, and possibly books in general, are included in Alabama and Arkansas.
- Emergency Preparedness Products – They don’t typically align with the school tax-free days, but some states like Florida and Virginia have tax-free days for Energy Star items and items related to emergency preparedness. We’re noting it here so you can look into the situation in your state and save additional money this year.
Most states only allow tax-free discounts up to a certain amount of money spent. In that case, you won’t pay the taxes on the allowed portion but will pay the taxes on the remainder.
How to Make the Most Out of Tax-free School Shopping Days
Whether or not you save money on tax-free shopping days depends on a few things. What you’re shopping for matters, and so does the store.
We all know that some stores raise prices before they do major sales (even stores that are going out of business tend to increase prices before decreasing them). It’s all part of the retail world, and that kind of price manipulation is part of the planning some stores do for the tax holiday just like they do for things like Black Friday.
You may not be able to use coupons during tax-free shopping days, and stores are unlikely to run any other sales while this event is going on. Though, some states do their tax-free days during back-to-school sales, which may save you a great deal more money.
Pay Attention to Regular Pricing
When it comes to the big-ticket items, especially, knowing what the product normally goes for will help you see if you’re saving money. Since taxes are a percentage added to the total cost of a shopping trip, the more you spend, the more you’ll save (if you’re getting the item at the regular price and not an inflated one).
Watch the prices starting a few weeks before the sale begins. This way, you know the going price before taxes drop, and you’ll know if the stores raised prices.
Know What You Can Buy
Take some time to do a little research on which items are offered tax-free in your state on tax-free school shopping days. Also, get to know how much you can spend. If your state limits your computer purchase to $750, you may want to find a computer that fits in that price range to save the most money.
Consider the Crowds and Time Cost
Another thing you should consider is that stores like Target and Walmart may be packed (think Black Friday). If you’re not getting a significant deal, the time you put into weeding through the crowds and standing in line to check out may not be worth it.
What You’re Buying (and How Much) Matters
If you’re not looking for big-ticket items, and just need some general school supplies for your child, tax-free days may not save you much money. If you have multiple children to shop for, you may save a lot. If you’re shopping for big-ticket items, then you’re likely to save more if the stores haven’t made any prior price changes.
Tax-free school shopping days are also beneficial to teachers who buy their own class supplies.
You can definitely save with tax-free holidays, but it pays to do your research on prices and focus on purchasing only items you would have bought anyways to maximize your savings.