Tax Free Back to School Shopping
Does anyone remember the Staples commercial from a few years back – you know the one where the Dad is pushing the cart down the school supplies aisle and the tune of “It’s the most wonderful time of the year” is playing? Well, it’s just about that time of year again!
Unfortunately, back to school shopping for clothes and supplies adds up – especially if you are like me and have 3 kids to shop for. I have been trying to pick up items here and there as I run across a good deal and I probably won’t buy clothes until after school starts or as they need them.
According to the National Retail Federation, families with school-age children are expected to spend $563.49 in 2007 for school-related gear – or $18.4 billion nationwide. Clothing and accessories comprise the biggest chunk of that spending. With average state sales tax rates of between 4 and 7%, that can really add up. (Source)
There are quite a few states that have recognized this and offer incentives for parents in the form of “tax holidays” or special tax-free shopping dates. For a complete list of states and the items that are tax free for each, visit The Tax Girl and her post called Sales Tax Takes a Holiday.
Beware of these! Unless the store is paying the sales tax you can be subject to state use taxes. Granted, you probably won’t get caught, but keep in mind the state frequently does audits. This is of particular not if you are a small business owner!
When DC Has their Tax Free Shopping Days, thats when I try to load up on my sons uniforms. Those things can get quiet expensive
Great minds think alike. Our sale is next weekend.
Just to clarify, if you shop on a sales tax holiday in the state where you reside, you wouldn’t be subject to a use tax. The use tax is the flip side of a sales tax and is meant to recover taxes that are not paid when you shop in another state (for example, if I am a PA resident and I buy a car in tax free DE, I owe use tax in PA).
But when the state actually exempts sales tax for the day, you would not be subject to use tax in that state.