Will Tax Free Holidays Lure Back-to-School Shoppers?
Are you more likely to shop for clothes and other items during tax free holidays?
Given the economy, it seems like tax free holidays are less likely to lure consumers to the mall. For the past five years, shoppers in Massachusetts, for example, have enjoyed a weekend-long holiday from state sales tax every August. But this year, the break is gone due to budget shortfalls. In fact, shoppers will see state sales taxes jump from 5% to 6.2% on August 1.
Lucky shoppers in Georgia, meanwhile, are gearing up for their own tax holiday which exempts taxes on school supplies, clothing and personal computers.
In addition, Mississippi residents are getting a taste of tax free shopping for the first time. They won't have to pay the usual 7% sales tax on clothing and shoes priced under $100 this weekend. (Accessories, such as backpacks and jewelry don't qualify for the tax exemption.)
Most tax free holidays are tied to the back-to-school shopping season. In Texas, consumers can stock up clothing on without paying state and local sales taxes on August 21 to August 23.
Of course, cash-strapped tax "evaders" aren’t expected to spend as much on back-to-school items this fall. According to a new survey just released by the National Retail Federation, in conjunction with consumer habits research firm Big Research, spending on school supplies is set to drop this year. The average family with students in grades K-12, the survey states, is expected to spend $548.72 on school merchandise — a decline of 7.7% from 2008.
I live in an geographic area with a lot of, dare I say it?, taxing choices. There is no sales tax in New York City for most clothing items under $100. But if you are buying something more expensive, it’s a smart move to head to New Jersey where there is no sales tax on clothes.
All told, at 16 states will have tax free holidays this year. SmartMoney has created an excellent guide to state tax free holidays with a list of what is exempt.
How much consideration do you give to taxes when you are doing your back-to-school shopping?