Image: Tax-free shopping
Rogelio V. Solis  /  AP
Bailey Long, 9, left, her mother Claudia Long, right, and cousin, Madeline Claire Hughes, 8, shop for new back-to-school wardrobes. Store coupons, discounted clothes and a sales tax holiday on clothing, were strong incentives for the family to go shopping in Mississippi.
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By Travel writer
msnbc.com contributor
updated 8/6/2009 9:59:15 AM ET 2009-08-06T13:59:15

Would you cross a (state) line to get a bargain?

Psst! You. Yes, you. Can I interest you in a Hello Kitty lunchbox, a 20-pack of freshly sharpened pencils, a blue hooded sweatshirt, or a new laptop computer? Would you head to the mall or drive to the next state if I knocked off the sales tax, and maybe threw in a free soda and some live entertainment? 

Think about it. Because while you’re probably sick of all that cutesy talk about staycations, daycations, and no-can-do-cations (I sure am), if you’re in the market for some book bags, office supplies, clothing, boots, or sporting goods now may be a very good time to give in and plan an end-of-summer shop-cation.

Cross a border, save some money
Despite being cash-strapped and in some cases, practically broke, at least 16 states around the country have once again declared a summer sales tax holiday. That means for a few days, (usually over a weekend), state sales tax is waived on a wide variety of merchandise. Depending on a state’s sales tax rate, shoppers might see a savings of $4 to $10 on every $100 they spend. And at a time when so many people are trying to stretch each and every dollar, that savings can add up to something meaningful. Or at least, retailers hope, get some people to at least buy something.

Originally created as a way to help parents save some cash on back-to-school shopping expenses, you certainly don’t need to be a parent or a student to take advantage of these tax-free sales. And while the official list of eligible items is usually described as “school supplies and books, clothing, footwear, and computers,” each state’s list of tax-free items is surprisingly inclusive. Everything from underwear to outerwear and paper clips to computers is usually included.

Still, before you plan a shopping spree, take a moment to study the tax holiday price limits and the items that are on and off the lists. Each state has its own price cap for various categories and there are wrinkles and product exemptions that may both surprise, stump you, or trip you up.

For instance, in Vermont, beer, wine and liquor are exempt from sales tax during the sales tax holiday. In Texas, qualifying “school supplies” can include compasses (think hiking trips) and any sort of paper, including legal pads. Eligible clothing includes hosiery, hooded sweatshirts, jogging apparel, pajamas and ties. But while belts with buckles are tax-free, belt buckles —without the belt — are not. It’s like that with hats: baseball, fishing, golf and knitted caps are tax-free during the Texas sales tax holiday, but hard hats and helmets for biking or playing baseball, football, hockey, or for riding a motorcycle, are not.

Where and when to go
Once you’ve decided to take a sales tax holiday, you’ll need to figure out where and when to go. Financial issues caused the District of Columbia and the state of Florida to cancel their scheduled sales tax holiday this year. Massachusetts not only canceled its summer sales tax holiday, but on August 1, the state increased its sales tax rate from 5 percent to 6.25 percent. Georgia and Mississippi held sales tax holidays this past last weekend. And this coming weekend (Friday though Sunday, August 7-9, in most places) they’ll be celebrating the sales-tax-holiday in Alabama, Iowa, Louisiana, Missouri, New Mexico, North Carolina, South Carolina, Oklahoma, Tennessee, and Virginia.

Connecticut will have a sales tax holiday on August 16-22, and in Texas, the tax-free shopping days will take place August 21-23. On August 22 only, there will be no sales tax levied for personal purchases up to $2,000 throughout the state of Vermont.

Most other states either don’t have a summer sales tax holiday or, like Oregon, Montana, Delaware, New Hampshire, and Alaska, don’t need to because they don’t charge any state sales tax year-round. (For an at-a-glance rundown of all state sales tax holidays, there’s a handy chart put together by the Federation of Tax Administrators listing each state’s sales tax holiday along with the items included and the maximum costs for each category.)

Some things to keep in mind
A sales tax is often a blend of city, county, and state taxes and some states may declare a state sales tax holiday but allow cities and counties to opt out.  Missouri is one of those states, and the Missouri Department of Revenue has published a long list of places, such as Branson, where shoppers will be charged local, but not state, taxes during the sales tax holiday weekend.  So before you start shopping, check to see if local taxes are being charged.

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It’s also important to know when a bargain is a bargain. If you’re only going to buy a few small things and the discount will be just the 5 percent sales tax, then it may not be worth getting in your car and traveling an hour or more into another state, says J. Craig Shearman, of the National Retail Federation.“But these days with the economy in the condition that it’s in, any savings may be appealing. For some families that 5 percent can be the make or break point for whether or not they buy clothing or school supplies at all. For others it can make the difference between buying a generic backpack or the one with the cartoon character on it. Anytime you’re paying less, well, less is good.”

Family financial expert Ellie Kay agrees. She says you can make sure you’re paying less and getting the best deals by researching prices online, studying where the sales are, and looking for any coupons or additional discount opportunities that may be available before you travel across town or across state lines in search of a tax-free purchase. Some individual stores and shopping centers plan special sales, prize giveaways, and entertainment specifically for tax-free holiday shoppers, so there may be even more ways to save. 

And if your family hasn’t taken an official summer vacation yet, Kay says you might consider turning your shopping spree into a family trip. “If you’ve wanted to go somewhere anyway, go online and check for special offers from hotels and restaurants near the places you plan to shop.” But be sure to set a budget for travel and meals ahead of time. “If you overspend on that trip, then you’ve negated the savings aspect of the sales tax holiday.”

Harriet Baskas writes msnbc.com's popular weekly column, The Well-Mannered Traveler. She is the author of the “Stuck at the Airport” blog, and a columnist for USATODAY.com.You can follow her on Twitter.

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