Everyone appreciates a good deal, especially when it comes from not paying taxes.
Twelve states are offering sales tax holidays beginning Friday, meaning that shoppers can up to 10 percent as they hit back-to-school sales for basic supplies and must-have accoutrements like “Minions” lunchboxes and “Frozen” backpacks.
But experts say that only the well-prepared will get the most out of the holidays, as each state has a different list of allowable items and there are price caps for each category.
Traditional back-to-school sales help many families keep to their fall budgets. So too will the state sales tax holidays that began today in Alabama, Florida, Iowa, Louisiana, Missouri, New Mexico, Ohio, Oklahoma, South Carolina, Tennessee, Texas and Virginia. Connecticut, Maryland and Massachusetts will have tax holidays later this month.
Sales tax holidays – which the Federation of Tax Administrators says date back to 1999 – are designed to boost state economies by encouraging consumers to spend more at a time when they’ve traditionally got their wallets open and credit cards out anyway.
One of those times is now, as parents stock up on school supplies. According to the National Retail Federation, the average family will spend more than $600 for each K-12 student and almost $900 per college student this year, for a total of $68 billion. That’s down a bit from last from last year.
Brent Shelton of FatWallet.com says savvy shoppers in the tax-holiday states can reap a “perfect storm of savings” and pocket 10 percent of total spending – more if they combine the tax savings with sales – if they do their homework and don’t get carried away.
The key is knowing that each state has a different list of allowable items exempted from the sales tax and there are price caps for each category. This list has basic details, but shoppers may want to check with retailers before getting into the checkout line to be sure that their purchases qualify.
For example, Missouri’s three-day tax holiday that began Friday offers a sales tax waiver on clothing, school supplies and computer software, personal computers and peripheral computer devices – with purchase limits in each category. But in Iowa, this weekend’s tax holiday runs only Friday and Saturday and the sales tax waiver only applies to clothing and footwear, with specific exclusions for items such as watches, handkerchiefs, roller blades, skates and sporting equipment.
To get the best deals, FatWallet’s Shelton urges shoppers to study the rules and consider shopping in both brick-and-mortar stores and online.
“In general, shoppers should look for savings of 25 percent off as a starting point for school supplies, clothing and shoes” and compare store circulars with online prices, he said. “If the prices look better at stores in states offering a tax holiday and driving to that store can bring savings as much as $30 or more, then it is worth the trip.”
It’s often possible to save even more, both online and in-store, by stacking discounts, coupons, student discounts, gift cards leftover from last holiday season, cash-back offers and instant or mail-in rebates, he said..
And don’t just think back-to-school, says Shelton, “savings available now can help the family or your business, too.”