Sales tax holidays are an annual tradition in many U.S. states, offering consumers a temporary break from the burden of sales taxes when shopping for specific items. These holidays are designed to promote consumer spending, stimulate the economy, and provide financial relief to residents during key shopping seasons. While sales tax holidays are common in many states, the details can vary significantly, including the dates, eligible items, and purchase limits. In this article, we will explore the concept of sales tax holidays, provide information on which states plan to offer them in 2023, and discuss some of the common eligible items.
What is a Sales Tax Holiday?
A sales tax holiday is a designated period during which certain goods and products are exempt from state and local sales taxes. These holidays are typically associated with specific shopping events, such as back-to-school shopping or hurricane preparedness, and are intended to help consumers save money on necessary items.
Sales tax holidays vary by state, so the specific dates, eligible items, and purchase limits may differ significantly. During a sales tax holiday, consumers can make qualifying purchases without paying state or local sales tax, which can amount to significant savings. The goal is to encourage consumers to make essential purchases and boost economic activity during the holiday season.
Common Types of Sales Tax Holidays
Sales tax holidays can cover a wide range of items and often correspond to seasonal shopping needs. Here are some common types of sales tax holidays:
Back-to-School Sales Tax Holidays: These typically occur in the late summer and coincide with the start of the school year. Shoppers can purchase school supplies, clothing, and sometimes even computers without paying sales tax.
Hurricane Preparedness Sales Tax Holidays: In states prone to hurricanes and severe weather, these holidays encourage residents to stock up on essential hurricane preparedness items such as generators, flashlights, and batteries.
Energy-Efficient Appliance Sales Tax Holidays: Some states offer holidays focused on energy-efficient appliances and products, providing incentives for consumers to make eco-friendly purchases.
Small Business Sales Tax Holidays: In an effort to support small businesses, some states offer sales tax holidays for purchases made from locally owned and operated businesses.
Gun and Hunting Sales Tax Holidays: Certain states have sales tax holidays for items related to hunting and firearms, encouraging responsible firearm ownership and hunting.
States Offering Sales Tax Holidays in 2023
Policymakers should lower the sales tax rate permanently rather than only during sales tax holidays. This would be a more practical and efficient strategy to reduce taxes for all people and companies. Sales tax holidays, according to a Tax Foundation analysis, “are political gimmicks that divert attention away from real, long-term tax relief.”
Sales tax holidays have limitations that both consumers and businesses should be aware of in order to avoid relying too much on them for large cost reductions. According to the research, “free advertising for what is effectively a four to seven percent discount leads many larger businesses to lobby for the holidays.”
Please note that the specific details of sales tax holidays, including eligible items and purchase limits, can change from year to year. It’s essential to check with your state’s department of revenue or taxation for the most up-to-date information on sales tax holidays in 2023.
Common Eligible Items
The items that are typically eligible for sales tax exemptions during sales tax holidays can vary widely from one state to another. However, some common eligible items include:
Clothing: Sales tax holidays often exempt clothing and footwear up to a certain price threshold per item. This can include items such as shirts, pants, dresses, shoes, and more.
School Supplies: School supplies, including pens, pencils, notebooks, backpacks, and calculators, are often eligible for tax exemptions during back-to-school sales tax holidays.
Computers and Electronics: Some states include computers, tablets, and related accessories in their sales tax holidays. This can be particularly valuable for students and families looking to purchase technology for educational purposes.
Hurricane Preparedness Items: Items like generators, batteries, flashlights, and tarps may be eligible for sales tax exemptions during hurricane preparedness sales tax holidays.
Energy-Efficient Appliances: States offering energy-efficient appliance sales tax holidays often exempt items like Energy Star-rated appliances, encouraging consumers to make more environmentally friendly choices.
Firearms and Hunting Equipment: In states with specific sales tax holidays for firearms and hunting, items like firearms, ammunition, and hunting gear may be eligible for tax exemptions.
Holiday Tax Rebates
Sales tax holidays are a popular and anticipated event for consumers, offering savings on a wide range of essential items. While not all states participate in sales tax holidays, many do, and the specific details can vary widely. Shoppers are encouraged to stay informed about sales tax holidays in their state, check the eligible items, and take advantage of the savings during these special events. It’s also important to verify the most up-to-date information with your state’s department of revenue or taxation to ensure you make the most of these tax-saving opportunities in 2023.