More than a dozen states have sales tax holidays in August 2018, providing a temporary sales tax exemption for a wide variety of items: summer sandals and winter coats, pencils and computers, even ammunition and guns.For example, tax-free periods apply both to state and applicable local taxes in most states. In a few, however, local governments aren’t required to participate; if they opt out, qualifying transactions are exempt from the state sales tax but not the local sales tax. Retailers that make sales statewide need to know which localities are taxing the eligible items and which are not.
In addition, states typically exempt different products. During South Carolina’s August sales tax holiday, bed linens and bath towels are exempt. These items remain taxable during the Oklahoma tax-free period held the same weekend.
There are also different price constraints. During the upcoming Arkansas back-to-school sales tax holiday, there are no price restrictions on school supplies. That same weekend in Missouri, school supplies must be priced at $50 or less for the exemption to apply.
Even seemingly minute differences can be significant. For example, the Ohio sales tax holiday concludes at 11:59 p.m. on Sunday, August 5, while the South Carolina sales tax holiday terminates August 5 at midnight, and Florida doesn’t specify a time. While this is unlikely to affect many brick-and-mortar transactions, one minute could mean the difference between an exempt and taxable transaction online. Retailers have to get the tax right.
Below is a list of states offering sales tax holidays in August 2018. Unlike previous years, Louisiana will not have a sales tax holiday this August.
Arkansas back-to-school sales tax holiday, August 4–5
• Clothing priced under $100
• Clothing accessories and equipment priced under $50
• School supplies (no price restriction)
• Applies to state and local sales tax
Connecticut tax-free week, August 19–25
• Clothing and footwear priced under $100
• Applies to state sales tax only — Connecticut has no local tax
Florida back-to-school sales tax holiday, August 3–5
• Qualifying clothing and footwear priced $60 or less
• Qualifying school supplies priced $15 or less
• Applies to state and local sales tax
Iowa sales tax holiday, August 3–4
• Qualifying items priced under $100
• Applies to state and local sales tax
• Vendors are required to participate
Maryland tax-free holiday, August 12-18
• Apparel and footwear priced at $100 or less
• For backpacks or bookbags, the first $40 is tax free
• Applies to state sales tax — Maryland has no local tax
Mississippi Second Amendment sales tax holiday, August 31–September 2
• Qualifying ammunition, firearms, and hunting supplies (no price restriction)
• Applies to state and local sales tax
Missouri back-to-school sales tax holiday, August 3-5
• Clothing priced $100 or less
• Computers priced $1,500 or less
• School supplies priced $50 or less
• Applies to state sales tax — local jurisdictions can choose to participate or not
New Mexico back-to-school tax-free holiday, August 3-5
• Bookbags, backpacks, maps, and globes priced under $100
• Clothing, footwear, and accessories priced less than $100
• Computers priced up to $1,000 (includes e-readers with computing functions and tablets)
• Computer-related items priced up to $500
• Handheld calculators priced under $200
• School supplies priced under $30
• Applies to state and local gross receipts taxes
• Retailers are not required to participate in the back-to-school tax holiday
Ohio sales tax holiday, August 3-5
• Clothing priced $75 or less
• School instructional materials priced $20 or less
• School supplies priced $20 or less
• Applies to state and local sales tax
Oklahoma sales tax holiday, August 3-5
• Clothing and footwear priced under $100
• Applies to state and local sales tax
South Carolina sales tax holiday, August 3-5
• Clothing and footwear, no price restrictions
• Computers, printers, and printer supplies, no price restrictions
• School supplies, no price restrictions
• Select bed and bath items, no price restrictions
• Applies to state and local tax
Texas sales tax holiday, August 10–12
• Clothing and footwear priced less than $100
• Specified school supplies and school backpacks priced less than $100 per item
• Applies to state and local sales tax
Virginia sales tax holiday, August 3–5
• Clothing and footwear priced $100 or less
• Energy Star and WaterSense products priced at $2,500 or less
• Portable generators priced $1,000 or less
• Gas-powered chain saws priced $350 or less
• Chain saw accessories priced $60 or less
• Specified hurricane and emergency preparedness supplies priced $60 or less
• School supplies priced $20 or less
• Applies to state and local sales tax
Wisconsin August sales tax holiday, August 1–5
• Clothing with a sales price of no more than $75 per item
• Computers, laptops, or tablets (purchased for personal use) with a sales price of no more than $750 per item
• School computer supplies with a sales price of no more than $250
• School supplies with a sales price of no more than $75 per item
• Applies to state and local sales tax
Sales tax holidays don’t just take place in August. They can be offered at any time of year, for any reason. But no matter when they occur, they complicate sales tax compliance for businesses. Tax automation software helps simplify it.
