Since 1997, a number of states, including Florida, Georgia, Iowa, Louisiana, Maryland, Mississippi, Missouri, New Mexico, New York, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Vermont, Virginia, West Virginia as well as Washington D.C., have enacted "tax-free weekends." Usually but not always coincident with back-to-school--or the pre-holiday shopping season--the state waives its sales tax for purchases of certain items during this time period. Approached intelligently, a tax-free weekend can be a fabulous time to shop, especially for items that tend to be included in the individual states' lists of tax-free goods. For example: apparel, educational supplies, computers, sports gear, personal care items and sometimes even household appliances.
Not Everything Counts
Not everything on the shelves is subject to tax-free weekend shopping. Since different states waive taxes on different categories of goods, it's vital to do your research. Before you shop, be aware of what type of merchandise your state won't be taxing over the course of the weekend and budget accordingly. It helps to have a printed copy of the state's tax-free goods list (See Resources) to show to a cashier if you have a problem during checkout.
States don't just restrict tax-free items according to category. They may also restrict these purchases according to the cost of the individual item. For example, a state may void tax-free status for items of clothing that retail for more than $100. Quantity is generally unlimited, but always check your shopping state's tax website for updates on restrictions. Not all cities and municipalities participate, so there may be local sales tax levied on your purchase even if state tax is not.
Many stores in participating states add their own discounts and promotions during tax-free weekends, increasing the appeal of a shopping marathon. Check print ads, newspapers, circulars and internet advertisements to determine which of your local retailers offer additional enticements. To enable savvy, strategic shopping that leverages all the available discounts, build a comprehensive list of discounts and cross-reference it with your shopping list.
If you're planning to attack a tax-free weekend strategically, keep a few things in mind. First, many stores in participating states extend their hours to accommodate the influx of shoppers. Since lines are generally longer, it may pay to shop during the morning and evening extensions. Secondly, don't rely on ATM's, as they may run out of cash during this busy period. Thirdly, shop smart: carry a list, bring published discounts, and compare prices before you venture out to the stores. If you don't, you may miss a price match or a special discount that you would have discovered with a little research.
Not a Resident?
If you aren't a resident in the state you shop in during a tax-free weekend, you may still end up paying Uncle Sam. Your home state may still require you to pay "use tax" on purchases that you take back across state lines, whether you bought the item(s) during a tax holiday in the state of purchase. Make sure to keep receipts for your purchases, and consult a taxation professional to determine any amount that you may owe.
- shopping spree image by MAXFX from Fotolia.com