2024 Sales Tax Holidays
With back to school shopping coming up, now is a good time to check in on your 2024 Sales Tax Holidays. Retailers should be aware of local dates so you can plan and schedule more staff if necessary to match the influx in foot traffic.
To help you get prepared and take advantage of this opportunity, we’ll share: what is a sales tax holiday, preparation questions, how to find out if your state participates and when, what products are included and price restrictions.
What is a sales tax holiday?
A sales tax holiday is a period of time when selected goods that are normally taxable, are exempted from state (and sometimes local) sales tax, including products such as back-to-school supplies, clothing, computers, hurricane preparedness supplies, and more. Sales tax holidays typically last for a day, a weekend, or a week. Retailers otherwise required to collect sales tax on taxable retail sales don’t collect it on sales of qualifying goods during a sales tax holiday.
Sales tax holidays and tax-free weekends are similar concepts, but they can have slight differences based on the terminologies. Both terms refer to specific periods of time when state or local governments waive the sales tax on certain items. The term "sales tax holiday" is usually used to describe both single-day and multiple-day periods, while "tax-free weekend" specifically refers to sales tax holidays that occur over a weekend.
PREPARATION QUESTIONS:
1. Does my state participate in tax free weekends?
2. What are the dates for the tax free weekends in my state?
3. Is my POS set up automatically or do I have to manually change it?
4. What items do the sales tax holidays affect?
5. When I file my sales tax do I need to report anything differently?
What products are included in tax-free weekends?
Every tax holiday is different, but most follow a certain theme. Back-to-school sales tax holidays that exempt qualifying school supplies and eligible clothing tend to be the most popular. There are also tax-free weekends for disaster preparedness supplies, Energy Star appliances, water-saving products, and even firearms, ammunition, and hunting supplies.
Do tax-free weekends have price restrictions?
Most sales tax holidays have price restrictions, but some don’t.
There’s no price cap during the annual South Carolina tax holiday, or during the tax-free periods offered by certain cities and boroughs in Alaska. Massachusetts has a high threshold of $2,500 for any single item of tangible personal property.
Yet price caps are more common than not, and they usually vary by the product sold. Clothing and footwear priced $100 or less are exempt during Missouri’s annual back-to-school holiday, while school supplies are only exempt if the retail sales price is $50 or less. Arkansas caps the price for clothing but not for school supplies during its annual holiday.
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