Tax free week is an annual event where shoppers can buy certain items tax free for a limited period of time. During tax free week, shoppers don’t have to pay sales tax on eligible purchases. This gives consumers a chance to save money and retailers an opportunity to make big sales. Keep reading to learn all about tax free week and how you can take advantage of it.
When is Tax Free Week?
Tax free weekends occur at different times throughout the year in different states and localities. Most tax free weekends take place over a 3-day period in the summer, usually the first weekend of August. However, some areas hold their tax holidays later in the year, like Florida which has a tax free week in early August as kids prepare to go back to school.
Other states like Texas hold two tax free weekends per year – one in August and another in January. The specific dates vary so you’ll need to check your state’s department of revenue website to find tax free weekend dates and details for where you live.
What is Eligible for Tax Free Purchases?
While the exact rules differ by location, tax free weekends generally cover clothing, footwear, school supplies, computers, and certain electronics. For example, many states allow tax exempt purchases on:
- Clothing and shoes under $100 per item
- School supplies such as backpacks, notebooks, pencils, etc.
- Computers under $1,500
- Computer accessories under $250 like printers, routers, external hard drives
Some states include other items too like sports equipment, bed and bath supplies, arts and crafts materials, EnergyStar appliances, hurricane preparedness items, and more.
However, there are limitations on sales tax exempt products. Usually groceries, medicine, furniture, toys, and other general purchases are still subject to sales tax. Be sure to check the qualified list for your state before assuming something is tax free.
Limits and Restrictions to Know
While tax holidays offer savings, there are some catches to be aware of:
Caps on Exemptions
- Many states limit tax free purchases to a certain dollar amount, like $100 off per item of clothing or $750 total per customer. This puts a cap on the total savings per shopper.
Hurdles for Online Purchases
- Tax free deals apply to eligible in-store purchases only in most areas. Online sales usually don’t qualify, even when buying from a local retailer.
Ineligible Items
- As mentioned, most states restrict tax holidays to certain products like clothing, shoes, computers, back-to-school supplies. Groceries and other common purchases are often ineligible.
Too Much Demand
- Retailers sometimes run out of stock on popular tax free items. Shop early to avoid missing out.
Tips for Maximizing Savings on Tax Free Weekends
Here are some tips to take full advantage of sales tax holidays in your state:
- Make a list – Plan out what you need ahead of time and make a shopping list so you don’t make frivolous purchases just because they’re tax free. Stick to necessities.
- Compare prices – Check ads and do your homework to be sure you’re getting the best tax-free deals. Don’t assume everything is a bargain.
- Shop early – Try to shop early during the tax free weekend to beat the crowds and find the best selection. Popular items sell out.
- Look for coupons – Check for additional manufacturer coupons and store promotions to combine with tax free savings. This can maximize your overall discounts.
- Think long-term – Consider stocking up on commonly used supplies you’ll need throughout the year like printer paper, pens, or classroom snacks. Saving on future purchases can add up.
The Purpose and Impact of Tax Free Holidays
There are a few reasons states offer tax free holidays throughout the year:
- Help families save money – Tax holidays provide relief on expenses like school supplies and clothes at peak times when families need to spend more.
- Support retail sales – The exemptions spur consumer spending, which gives a boost to businesses. In some states, tax free weekends are restricted to smaller local retailers instead of major chains to provide targeted economic stimulus.
- Encourage commerce – In Florida, tax holidays tend to center around hurricane preparedness supplies prior to storm season. This incentivizes people to make emergency purchases.
- Increase state tax revenue – Though counterintuitive, studies show that the surge in retail activity during tax free weekends increases overall sales tax collections in the long run. Shoppers often make additional non-exempt purchases beyond just the tax free deals.
However, critics argue that tax holidays are more hype than real savings and point out problems like market distortions, discrimination against certain products, and administrative burdens for businesses to comply.
The Bottom Line
Tax free weekends offer a rare chance to save on select purchases in participating states. To maximize your savings:
- Mark your calendar and know the rules
- Make a strategic shopping list
- Arrive early and move quickly
- Stack savings with coupons when possible
- Buy exempted items you’ll use all year long
While restrictions apply, tax free weekends are a nice bonus that allow you to save a little money while buying essentials for yourself, your family, or getting ready for the school year ahead. Just understand the fine print and shop smart to take full advantage.
Conclusion
Tax free weekends provide a welcome break on sales tax for shoppers once or twice a year. Retailers also benefit from increased customer traffic and sales volume during the promotional period. While the rules, timing and extent of savings vary by state, tax holidays remain popular with consumers looking to cut costs on clothes, shoes, computers, and school supplies right before heading back to class. Just remember to research the details in your area beforehand so you can shop strategically and maximize your savings next time a tax free week rolls around.
