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Sales Tax Holiday Round-Up: Here’s What’s ‘Tax-Free’ in Your State

Several states will be holding Sales Tax Holidays in August, many this very weekend! But if you think that the sales tax holidays are just for back-to-school shopping – think again!

Sales Tax Holidays are a great time for business owners to stock up on everyday business supplies since sales tax exemptions on items such as pens, pencils, hand-held calculators, and even major purchases like computers, computer software and other computer related devices, will apply in many states. And while most states have a limit on the dollar amount that can purchased “tax free” (often these are per item or per purchase), some states have set their limits relatively high.  For instance, this weekend Georgia consumers can get a sales tax break on computers, components, and off-the-shelf software purchased for non-commercial home or personal use with a purchase price of up to $1,000 per item. In Louisiana, residents can enjoy a sales tax break on the first $2,500 of the purchase price of just about anything.

Also, while the Sales Tax Holiday in most states are 2 or 3 days, two states (CT and MD) will have a week-long holiday.  Also keep in mind that while the state sales tax might not apply –  some states allow their local jurisdictions (cities, counties) to decide whether they want to participate or not – so local sales tax could still apply on some purchases.

Which states will be holding a 2014 Sales Tax Holiday? And when exactly will this “tax-free” shopping be happening?  Whether you’ll be shopping in Alabama, Louisiana, Tennessee or any of the Sales Tax Holiday states — here’s everything you need to know about your state’s Sales Tax holiday.   Happy shopping!

ALABAMA:  The three-day 2014 Sales Tax Holiday in the Yellowhammer State will run from 12:01 a.m., Friday, August 1st through 11:59 p.m., Sunday August 3rd.  Exempt from Alabama sales tax are most types of clothing with a cost of $100 or less per item, as well as certain school supplies with a cost of $50 or less per item and books with a sales price of $30 or less. Business owners take notice: Also sales-tax exempt during the holiday are laptops, desktops, or tower computer systems, computer software, school computer equipment (including various handheld devices, such as PDAs, but not cell-phones), printers and printer supplies. The total computer related purchases must be made in one single transaction and only up to $750 of the total cost can be sales tax exempt. For more information visit the Alabama Department of Revenue’s 2014 “Back-to-School” Sales Tax Holiday”  webpage.  Be sure to click on the Quick Reference Sheet to see a detailed listing of exempt and taxable items.  By the way, if you’re an Alabama retailer, participating in the sales tax holiday is mandatory – it’s against the law to charge sales tax on items that are exempt.  One last note, Alabama cities aren’t required to participate, so local sales taxescould apply.

ARKANSAS:  The Natural State will hold its two–day 2014 Sales Tax Holiday from 12:01 a.m., Saturday, August 2nd through 11:59 p.m., Sunday August 3rd.  Arkansas’ Sales Tax Holiday is primarily geared toward back-to-school shopping and will apply to items of clothing with a sales price of under $100 per item, clothing accessories or equipment with a sales price of under $50 per item, and school art supplies, school instructional materials and traditional school supplies (no dollar limit on these items). For more information visit the Arkansas Department of Finance and Administration’s “2014 Sales Tax Holiday”webpage.  Be sure to click on the 2014 Sales Tax Holiday – Exempt and Taxable Item table to see a detailed listing of what can purchased “tax-free”.  All Arkansas retailers are required to participate and may not charge tax on items that are legally tax-exempt during the Sales Tax Holiday.  Guidance for Arkansas retailers can be found Instructions for Retailers.

CONNECTICUT:  The Constitution State will hold its one week sales tax holiday from 12:01 a.m., Sunday, August 17th through 11:59 p.m., Sunday, August 23rd.  Connecticut’s 2014 Sales Tax Holiday applies primarily to clothing and footwear with a sales price of less than $300 per item per item.  For more information visit the Connecticut Department of Revenue Services “2014 Sales Tax Holiday” webpage and its  webpage on Exempt and Taxable apparel.  Guidance for Connecticut retailers can be found at this comprehensive Sales Tax Holiday Informational Bulletin.

FLORIDA:  The Sunshine State will be shining three days of ‘tax-free’ deals on its residents from 12:01 a.m., Friday, August 1st through 11:59 p.m., Sunday, August 3rd.  Sales tax exempt items include clothing, footwear and certain accessories with a sales price of $100 or less per item; school supplies with a sales price of $15 or less per item; and up to the first $750 of the sales price of personal computers and related accessories purchased for noncommercial home or personal use. For more information visit the Florida Department of Revenue’s 2014 Sales Tax Holiday Tax Information Publication. Need even more information? Then check out the FAQs for taxpayers for the Back to School Holiday, FAQs for business owners for the Back to School Holiday, and A list of all items for the Back to School Holiday.

GEORGIA: The Peach State will hold its two-day 2014 Sales Tax Holiday from 12:01 a.m., Friday, August 1st through 11:59 p.m., Saturday, August 2nd.  Exempt from Georgia sales tax will be clothing and footwear with a sales price of $100 or less per article or pair, computers, computer components, and prewritten (off-the-shelf) software purchased for non-commercial home or personal use with a sales price of $1,000 or less per item, and general school supplies with a sales price of up to $20 per item. For more information, including a comprehensive list of taxable and exempt items, see this Georgia Department of Revenue 2014 Sales Tax Holiday Fact Sheet and this Informational Bulletin SUT 2014-04-29.

IOWA: The Hackeye state will hold its two-day 2014 Sales Tax Holiday from 12:01 a.m., Friday, August 1st through 11:59 p.m., Saturday, August 2nd.  Exempt from Iowa sales tax will be each article of clothing or footwear with a sales price of less than $100.  For more information, visit the Iowa Department of Revenue’s Annual Sales Tax Holiday webpage. Also see Iowa’s  Sales Tax Information flier, which contains helpful information for Iowa retailers, and this Taxable and Exempt List.

LOUISIANA: The Pelican State will hold its two-day 2014 Sales Tax Holiday from 12:01 a.m., Friday, August 1st through 11:59 p.m., Saturday, August 2nd.  Louisiana’s tax holiday means deals for the whole family as its Sales Tax Holiday applies to non-commercial purchases of just about anything, but only up to the first $2,500 of the purchase price of each eligible item.  There are special rules dealing and a few exceptions (mostly dealing with vehicles, meals and services), so you’ll want to see the visit the Louisiana Department of Revenue’s Sales Tax Holiday News Release.  A full explanation of the conditions can also be found at this 2014 Louisiana Sales Tax Holiday webpage.  Keep in mind that local jurisdictions aren’t required to particulate,  so local sales tax could still apply to your purchase.

MARYLAND: The Old Line State joins Connecticut as the second state to offer a full weekof ‘tax-free’ shopping.  Maryland’s week long 2014 Sales Tax Holiday will run from 12:01 a.m., Sunday, August 10th through 11:59 p.m., Saturday, August 16th. During the week long holiday, most types of clothing and footwear with a sales price of less than $100 per item will be tax exempt.  For more information, visit the Maryland Comptroller’s Shop Maryland Tax-Free Week webpage.  More specifics on what’s exempt and what’s taxable can be found at this List of Taxable and Exempt Items. Even more information can be found at this Tax-Free-Week FAQ

MASSACHUSETTS: Although it took a while for Massachusetts legislators to decide when the Bay State’s 2014 Sales Tax Holiday would be, it was finally decided that a two-day Sales Tax Holiday would occur from 12:01 a.m., Saturday, August 16th through11:59 p.m. Sunday, August 17th. The Massachusetts Sales Tax Holiday will mean great deals for the whole family as just about any item with a cost of up to $2,500 can be purchased “tax-free.” The tax exemption, however, only applies to items purchased for personal use and not for business use (retailers are instructed to charge sales tax if a business credit card is used). Specific items that are not entitled to the sales tax exemption include vehicles, motorboats, meals, telecommunications services, utilities, and tobacco products. For more on the Massachusetts Sales Tax Holiday, including special instructions for retailers, see this Massachusetts Information Document: TIR 14-7: The 2014 Massachusetts Sales Tax Holiday Weekend.

MISSOURI:  The ‘Show Me’ State will be showing its residents how generous the state can be with a three-day 2014 Sales Tax Holiday that runs from 12:01 a.m., Friday, August 1st through 11:59 p.m. Sunday, August 3rd.  Certain back-to-school purchases, such as noncommercial purchases of clothing (but not accessories) with a sales price of $100 or less per item; school supplies up to $50 per purchase; computer software with a sales price of $350 or less; and computers and computer peripherals with a sales price of up to $3,500, will be tax exempt.  For more information, see Missouri Department of Revenue’s various Back to School Sales Tax Holiday webpages and information bulletins: Information for Vendors, Information for Consumers and Frequently Asked Questions. Finally, certain Missouri cities may have elected not to participate in the 2014 Tax Holiday, so consumers may still be charged a city sales tax even if the item purchased is exempt from the state sales tax.

NEW MEXICO:  The Land of Enchantment will enchant its residents with a three-day 2014 Sales Tax Holiday that runs from 12:01 a.m., Friday,  August 1st through 11:59 p.m., Sunday, August 3rd.  During the Sales Tax Holiday clothing and footwear with a cost of less than $100 per article, desktop, laptop or notebook computers with a cost of less than $1,000, related computer hardware with a cost of less than $500, and school supplies for use in standard, general-education classrooms with a cost of less than $30 per item, will be tax-exempt.  For more information, see the New Mexico Department of Taxation’s  Tax Holiday webpage and this New Mexico bulletin on exempt and taxable items.

OKLAHOMA: The Sooner State’s three-day 2014 Sales Tax Holiday will run from 12:01 am, Friday, August 1st through 11:59 p.m.,Sunday, August 3rd.  Consumers will be able to purchase certain clothing and footwear with a sales price of less than $100 per article free of sales tax.  Retailers are required to participate and may not charge tax on items that are legally tax-exempt during the sales tax holiday. The Oklahoma Sales Tax Holiday also requires cities so exempt purchases will be completely ‘tax-free’. For more information visit the Oklahoma Tax Commission’s Sales Tax Holiday webpage.

SOUTH CAROLINA:  The Palmetto State’s three-day 2014 Sales Tax Holiday runs from 12:01 a.m., Friday, August 1st through 11:59 p.m., Sunday, August 3rd.  During this time, the state’s sales tax will not apply to clothing and certain accessories, footwear, traditional school supplies, computers, printers and printer supplies and computer software.  Clearly meant for the college dorm crowd, South Carolina’s Sales Tax holiday will also exempt many types of bed and bath items (e.g., blankets, bed spreads, sheet sets, comforter sets, bath towels, shower curtains, etc.)  For more information, see this South Carolina Department of Revenue  Information Document, this detailed ruling on exempt and taxable items, and this Q&A document.

TENNESSEE: The Volunteer State’s three-day 2014 Sales Tax Holiday runs from 12:01 a.m., Friday, August 1st through 11:59 p.m., Sunday, August 3rd.  Tax-free items include clothing with a price of $100 or less per item, school and school art supplies with a price of $100 or less per item and computers with a price of $1,500 or less. These items are exempt from state and local sales tax in Tennessee during the holiday. For more information, see Tennessee’s 2014 Sales Tax Holiday webpage.

TEXAS: The Lone Star State will hold its three-day 2014 Sales Tax Holiday from 12:01 a.m., Friday, August 8ththrough 11:59 p.m., Sunday, August 10th.   During the tax holiday, most clothing items, footwear, school supplies and backpacks with a sales price of less than $100 per item will be tax exempt. For more information visit the Texas Comptroller’s Sales Tax Holiday webpage.  For more specifics on what’s exempt and what isn’t see this List of Qualifying Clothing, Footwear and Items and this list of Qualifying School Supplies. If you’re a Texas Retailer, you’ll also find helpful information for retailers at this webpage.

VIRGINIA: The Old Dominion State’s three-day 2014 School Supplies and Clothing Sales Tax Holiday runs from 12:01 a.m., Friday, August 1st through 11:59 p.m., Sunday, August 3rd.  Tax-exempt item include qualifying school supplies with a sales price of $20 or less per item and qualifying clothing and footwear with a sales price of $100 or less per item.  For more information visit Virginia’s Sales Tax Holiday Information Center webpage.

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Sales Tax Holidays – a good time to not only outfit the kids for school, but possibly snag some deals for your business too!  Keep in mind that each state’s summary is just that – a summary.  Things can get a little blurry, for instance, when you’re trying  to figure whether certain items like watches, jewelry or handbags qualify as an exempt clothing item or accessory.  The links to the various state Sales Tax Holiday webpages and information documents will provide much more details on what items qualify for tax-free treatment and which don’t.  And if you’re wondering why I’ve noted the exact time each Sales Tax Holiday begins and ends, that’s because on-line purchases made during the Sales Tax Holiday are also exempt.  So if you’re a resident of a state where Amazon collects tax, and you make your purchase during the hours that your state’s Sales Tax Holiday is in effect, your on-line purchase should also be tax exempt.

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Sylvia F. Dion, CPA is the Founder and Managing Partner of PrietoDion Consulting Partners LLC, a tax consulting firm specializing in providing State & Local Tax and Employment Tax Consulting Services. Sylvia is also a speaker and tax writer whose articles have been published in the Journal of Accountancy, Bloomberg BNA’s Multistate Tax Report and in other leading professional journals. Sylvia is also avid blogger, speaker and recognized authority on state tax issues whose work has received favorable mention in Forbes.com and is often quoted on taxes in media reports, such as Bloomberg BusinessWeek. Sylvia is also a proud Latina, is fluent in Spanish and was recently named a top 50 Accountant on Twitter (@SylviaDionCPA)