Tax-free shopping days give back-to-schoolers a break
Nine states and the District of Columbia are doing away with the sales tax on items such as clothes, shoes and even notebooks over the next few weeks, just in time for back-to-school shopping.
Most of the promotions last only a few days, so shoppers will have to act quickly to get a tax break. The tax holidays, which have already expired in two other states, apply to small and large items. For example, the tax break applies to any school supply that costs $15 or less in New Mexico. In Massachusetts, it covers most retail purchases of $2,500 or less.
Stores may offer additional savings because these events “give retailers an opportunity to have a sale on top of what the state is doing,” says Verenda Smith, government affairs associate at the Federation of Tax Administrators.
No industrywide figures are available about how much consumers save annually from these tax breaks. But Texas estimates that shoppers will save $47.4 million in taxes this year, nearly a 3% increase from 2004. Massachusetts says shoppers saved roughly $10 million in taxes during its 2004 event.
States that cast aside these promotions when a slow economy pinched state budgets are now reviving them in hopes of stimulating local economies. Some states also believe the gain in consumer goodwill helps balance out the loss in tax revenue.
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