The economy may be cooling, but retailers are hoping back-to-school shopping will stay hot. Despite the pandemic, back-to-school expenses have increased.
According to the National Retail Federation’s annual survey, families with children in elementary through high school are expected to spend $37.1 billion last year, up from $33.9 billion in 2020. That marks a record since the survey , which measures how American families buy clothes, supplies and other items for the upcoming school year, began in 2003.
With some schools just letting students out, back-to-school projections aren’t yet released for 2022. But states, understanding that retailers are competing with online sales, are trying to keep shoppers local. One of the ways they do it? Sales tax holidays.
Sales tax exemptions are intended to help families save money on essentials. It’s an idea that many lawmakers feel they can support, while many experts say the benefits are too limited to be significant.
Sales tax holiday history
According to the Tax Foundation, the first sales tax exemptions occurred in Ohio and Michigan in 1980, targeting automobile purchases. The idea didn’t really catch on until 1997, when New York introduced a sales tax exemption for clothing to keep shopping dollars within its borders.
Over the next few years, several states introduced sales tax exemptions. Some have made them regular features, usually targeting back-to-school purchases. On the other hand, others declined, depending on the level of filling of their coffers.
Last year, sales tax exemptions cost states and local governments more than $550 million in lost revenue, i.e. according to a survey by the Institute on Taxation and Economic Policy (ITEP) cost estimates from state tax expenditure reports, tax memos, tax services, and academic studies. These numbers are up from the estimated $300 million in 2020.
Realistically, that revenue will have to be offset somewhere. While some states, like California, are running an operating surplus, not all states are feeling so good. Eighteen states will hold a sales tax holiday in 2022, one below the record of 19 states in 2010.
Sales tax holidays remaining in 2022
Here’s an overview of state sales tax holidays for the rest of 2022, along with exempt items:
Alabama (July 15-17): Clothing $100 or less per item, computers $750 or less, school supplies $50 or less per item, and books $30 or less per item
Arkansas (August 6-7): Clothing and shoes under $100 each, clothing accessories under $50 each, and school supplies, art supplies and textbooks
Connecticut (August 21-27): Clothing and footwear under $100 per item, excluding clothing accessories, protective or athletic clothing and certain footwear
Florida (May 14-August 14): Children’s books
Florida (May 28 to June 10): Disaster relief items, with block exemption for items priced between $1 and $1,000
Florida (July 1-7): Retail admission to music events, sporting events, cultural events, specified shows, movies, museums, state parks and fitness facilities, as well as eligible boating and nautical supplies, camping supplies, fishing supplies, general outdoor supplies, backyard pool supplies, and sports equipment.
Florida (July 1, 2022-June 30, 2023): Children’s diapers and infant and toddler clothing, clothing and footwear
Florida (July 1, 2022 to June 30, 2023): new Energy Star appliances, including clothes dryers for $1,500 or less, refrigerators or combination refrigerator/freezers for $3,000 or less, washing machines for $1,500 or less and water heaters for $1,500 or less
Florida (July 1, 2022-June 30, 2024): impact doors, impact-resistant garage doors and impact-resistant windows
Florida (July 25 to August 7): Clothing, shoes and certain accessories with a sale price of $100 or less per item, certain school supplies with a sale price of $50 or less per item, learning aids and breakage items with a sale price of $30 or less, personal computers and certain computer accessories with a sale price of $1,500 or less
Florida (September 3-9): Tools commonly used by skilled workers, including work gloves, toolboxes, work boots, etc. ; dollar limit varies by type of goods
Illinois (August 5-14): Sales tax due is reduced from 6.25% to 1.25% on qualifying clothing and footwear priced below $125 per item and on certain school supplies not subject to the tax threshold. $125.
Iowa (August 5-6): Clothes or shoes at $100 or less per item
Maryland (August 14-20): cCertain clothing, footwear and accessories, including sweaters, shirts, pants, jeans, dresses, bathrobes, underwear, belts, shoes and boots priced at or below $100 , and the first $40 purchase of a backpack/school bag is also tax exempt
Massachusetts (Date TBD, although legislation was enacted in 2018 establishing an annual sales tax exemption): Most retail items for personal use
Mississippi (July 29-30): school supplies, clothing and shoes under $100 per item
Mississippi (August 26-28): Sale of firearms, ammunition and certain hunting articles
Missouri (August 5-7): clothing $100 or less per item, school supplies $50 or less per item, computer software $350 or less, personal computers or computer peripherals $1,500 or less, and graphing calculators of $150 or less
Nevada (October 28-30): Tangible personal property sold to certain members of the Nevada National Guard and their eligible dependents living at the same physical address in Nevada
New Mexico (August 5-7): Shoes and clothing under $100 per item, school supplies under $30 per item, computers under $1,000 per item, and computer peripherals under $500 per item
Ohio (August 5-7): Clothing at $75 or less per item, school supplies at $20 or less per item and teaching materials at $20 or less per item
Oklahoma (August 5-7): Clothes and shoes under $100 each
Caroline from the south (August 5-7): back-to-school clothing, accessories and supplies, backpacks and computers
Tennessee (July 29-31): Clothing priced at $100 or less per item, computers priced at $1,500 or less, and school and art supplies priced at $100 or less per item
Tennessee (July 1, 2021-June 30, 2022): Gun safes and security devices
Texas (August 5-7): Clothing, shoes, school supplies and backpacks under $100
West Virginia (August 5-8): Clothing $125 or less, school supplies $50 or less, educational materials $20 or less, laptops and tablets $500 or less, and sports equipment $150 or less
The fine print
These are general guidelines for state sales tax exemptions based on currently available information. As you know, the tax may depend on the facts and circumstances, so check with your state tax department for details on what items may be exempt. Also, keep in mind that some state offers allow counties and cities to opt out, so some sales taxes may still apply.
Don’t see your state listed? Five states have no statewide sales tax (Alaska, Delaware, Montana, New Hampshire, and Oregon), while others (like Vermont and my home state of Pennsylvania) already exempt basic necessities such as clothing.
This is a regular column from Kelly Phillips Erb, the Taxgirl. Erb offers commentary on the latest tax news, tax law and tax policy. Look for Erb’s column each week in Bloomberg Tax and follow her on Twitter at @taxgirl.