Retailers have been promoting back-to-school deals since, well, since before many kids were even out of school. But the annoyance of endless seasonal promotions is only one reason to hold off a little while longer on back-to-school purchases.
It’s become tradition for states to waive sales tax on special weekends during the peak back-to-school shopping period. The Federation of Tax Administrators lists this year’s 17 participating states, some of which host several tax-free weekends spread throughout the year. Typically, the back-to-school sales tax weekends take place in late July or early August. That’s right around the corner.
Because of the typical rules and restrictions on sales tax holidays, these events probably won’t save families a ton of money. Iowa, for instance, only waives the tax on select clothing and footwear priced under $100, and there’s a long list of items that aren’t exempt. The state sales tax in Iowa is 6%, so the most you’d save is $6 per item.
North Carolina offers one of the more generous policies, waiving the usual sales tax on clothing, footwear, and school supplies that individually cost $100 or less, sports equipment that’s $50 or less, and computers of $3,500 or less, among other items. Bear in mind that 2013 may be the final year for tax-free holidays in the state: North Carolina Republicans have proposed a tax reform bill that would eliminate certain tax holidays, including the annual waiving of sales tax during the back-to-school period.
If a shopper isn’t only saving a few dollars during the tax-free days, is it really worth it to delay purchases? Well, every little bit helps.
And in addition to the small percentage that you’re not paying in sales tax during these special days, many retailers also host special deals and discounts timed to coincide with tax-free events. Few retailers give much advance notice for these sales, likely out of fear that shoppers will understandably put off purchases so that they can take advantage of the combo markdowns-no-tax holidays. In fact, one argument against sales tax holidays, from the economist’s point of view, is that they don’t increase spending so much as change the timing of purchases.
Regardless of whether or not sales tax holidays help businesses and state coffers, they can help families trying to get the most for their money—especially when no-tax days are paired up with a good sale. Take advantage if you can, while you still can.