What to Know About Sales Tax Holidays
We’ve all heard the saying, “Nothing is certain except death and taxes,” but millions of people can avoid taxes for at least a few days each year through a sales tax holiday.
What is a sales tax holiday?
A sales tax holiday provides a temporary break from sales tax on certain products. States and local governments can institute a sales tax holiday to encourage increased economic activity (also known as…shopping).
Depending on the sales tax in your state and how much you need to buy, a sales tax holiday can save you a good chunk of change. For example, in a state with a 6% sales tax rate, you would save $30 on $500 worth of qualifying purchases.
Tips to Get the Most Out of a Sales Tax Holiday
Mark the dates
Start by researching whether your state offers a sales tax holiday by googling the name of your state plus “sales tax holiday.” If your state does offer one, you’ll find a link to the state’s taxation department website which will provide the applicable dates. If the sales tax holiday is a ways off, set a calendar reminder so you don’t forget about it. Keep in mind that you aren’t limited to your own state so if you live near your state line, check whether your neighboring state offers a sales tax holiday as well.
Plan your purchases
Make a list in advance of the items you plan to purchase during the sales tax holiday and shop around for the best deals. Just because you’re saving on taxes doesn’t mean you can’t also benefit from other promotions and coupons. Keep in mind that sales tax holidays typically apply only to certain types of products, so research which items the sales tax holiday applies to in your state. The most common exempt products include clothing, school supplies, and computers. Some states also have limits on the maximum amount an item can cost to qualify for the sales tax holiday, such as $100 or less for an item of clothing.
Don’t go overboard
Just like a good promotion can create an urgency to spend more than planned, so too can a sales tax holiday. Resist the urge to impulse buy by sticking to your list and choosing a way to shop (whether online or in-person) that best suits your self-control when it comes to shopping. Prioritize your needs over your wants to take advantage of a financial break on purchases you would have made anyway.
Final Thoughts
By following these tips and planning ahead, you can maximize your savings during a sales tax holiday. Remember, the goal is to save money on planned purchases, not to overspend, so mark your calendars, make a list, stick to your plan, and enjoy the tax-free savings!
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