Some states are offering sales tax holidays for buyers in 2022
The economy may be cooling, but retailers are hoping back-to-school shopping will stay hot. Despite the pandemic, back-to-school expenses have increased.
According to the National Retail Federation’s annual survey, families with children in elementary through high school are expected to spend $37.1 billion last year, up from $33.9 billion in 2020. That marks a record high since the survey , which measures how American families buy clothes, supplies and other items for the upcoming school year, began in 2003.
With some schools just letting students out, back-to-school projections aren’t yet released for 2022. But states, understanding that retailers are competing with online sales, are trying to keep shoppers local. One of the ways they do it? Sales tax holidays.
Sales tax exemptions are intended to help families save money on essentials. It’s an idea that many lawmakers feel they can support, while many experts say the benefits are too limited to be significant.
Sales tax holiday history
According to the Tax Foundation, the first sales tax holidays took place in Ohio and Michigan in 1980, targeting automobile purchases. The idea didn’t really catch on until 1997, when New York introduced a sales tax exemption for clothing to keep shopping dollars within its borders.
Over the next few years, several states introduced sales tax exemptions. Some have made them regular features, usually targeting back-to-school purchases. On the other hand, others retreated, depending on the level of filling of their coffers.
Sales tax exemptions cost states and local governments more than $550 million in lost revenue last year, according to an Institute on Taxation and Economic Policy (ITEP) survey of tax estimates. costs of state tax expenditure reports, tax memos, tax services, and academics. studies. These numbers are up from the estimated $300 million in 2020.
Realistically, that revenue will have to be offset somewhere. While some states, like California, are running an operating surplus, not all states are feeling so good. Eighteen states will hold a sales tax holiday in 2022, one below the record of 19 states in 2010.
Sales tax holidays remaining in 2022
Here’s an overview of state sales tax holidays for the rest of 2022, along with exempt items:
Florida (July 1-7): Retail admission to music events, sporting events, cultural events, specified shows, movies, museums, state parks and fitness facilities, as well as eligible boating and nautical supplies, camping supplies, fishing supplies, general outdoor supplies, backyard pool supplies, and sports equipment.
Florida (July 1, 2022 through June 30, 2023): New Energy Star appliances, including clothes dryers for $1,500 or less, refrigerators or combination refrigerator/freezers for $3,000 or less, washing machines for $1,500 or less less and water heaters for $1,500 or less. less
Florida (July 25-August 7): Clothing, shoes and some accessories with a sale price of $100 or less per item, certain school supplies with a sale price of $50 or less per item, learning aids and puzzles with a retail price of $30 or less, personal computers and certain computer accessories with a retail price of $1,500 or less
Maryland (August 14-20): Select apparel, footwear and accessories, including sweaters, shirts, pants, jeans, dresses, robes, underwear, belts, shoes and boots at price of $100 or less, and the first $40 of a backpack/schoolbag purchase is also tax-exempt
Missouri (August 5-7): Clothing $100 or less per item, school supplies $50 or less per item, computer software $350 or less, personal computers or computer peripherals $1,500 or less, and graphing calculators $150 or less less
The fine print
These are general guidelines for state sales tax exemptions based on currently available information. As you know, tax may depend on the facts and circumstances, so check with your state tax department for details on what items may be exempt. Also, keep in mind that some state offers allow counties and cities to opt out, so some sales taxes may still apply.
Don’t see your state listed? Five states have no statewide sales tax (Alaska, Delaware, Montana, New Hampshire, and Oregon), while others (like Vermont and my home state of Pennsylvania) already exempt basic necessities such as clothing.
This is a regular column from Kelly Phillips Erb, the Taxgirl. Erb offers commentary on the latest tax news, tax law and tax policy. Look for Erb’s column each week in Bloomberg Tax and follow her on Twitter at @taxgirl.