State Sales Tax Holidays Offer Small Business Opportunity

July 26, 2013
Back to school sign

Whether your small business is buying or selling goods, state sales tax holidays during the back-to-school shopping period provide opportunities to save money – and earn profits!

This year, 18 states have a total of more than 25 separate sales tax holidays that exempt certain purchases from state sales taxes.

Depending on where they are based, tax holidays can offer small business owners several opportunities to make or save money, including:

  • The chance to increase sales by promoting their businesses or holding special events during the tax holidays.
  • The chance to make purchases of qualifying computers, accessories, software, and supplies they use in their business.
  • The chance to purchase goods for donation to an organization that might not otherwise qualify for a sales tax exemption. (For example, a non-profit that may be subject to state use taxes that are waived during the sales tax holidays.)

The sales tax holidays don’t usually apply to items sold online, to items sold on layaway or other forms of delayed purchase, or to leases or rentals. Small business owners may still have to collect use taxes, or city or county sales taxes if those are not also waived for the tax holiday.

The key to saving money and making money during the state sales tax holidays is planning. It isn’t always obvious what the rules are, and they vary widely from state to state and even county to county in some states. To maximize the benefit for your small business, talk to your tax advisor as early as possible.

Here’s a list of the 2013 state sales tax holidays, with links to the rules small businesses need to know about accounting for goods sold during the sales tax holidays, and as well as making purchases during them.

2013 Sales Tax Holidays

Alabama Sales Tax Holiday: Starts one minute after midnight on Saturday, August 3, and ends at midnight on Sunday, August 4. Covers: School supplies, computers, and certain clothing items. Alabama also has a Hurricane Preparedness Tax Holiday in February.

  • Arkansas Sales Tax Holiday: Starts one minute after midnight on Saturday, August 3, and ends at 11:59 p.m. on Sunday August 4. Covers certain school supplies, school art supplies, school instructional materials, and clothing.
  • Connecticut Sales Tax Holiday: August 18-24. Covers: Clothing and shoes costing less than $300.00.
  • Florida Sales Tax Holiday: August 2-4. Covers: School supplies, certain clothing items, and (for the first time) some digital items costing less than $750 including:
    • Electronic book readers
    • Laptops and desktops
    • Tablets and other hand-held devices
    • Keyboards and mice
    • Monitors (without TV tuners)
    • Modems and routers
    • Non-recreational software
    • Note: Cell phones, video game consoles, digital media devices and what the legislature calls other devices not used for data processing are not included in the sales tax holiday.
  • Georgia Sales Tax Holidays: Starts one minute after midnight on August 9, and ends at midnight on August 10; repeats starting one minute after midnight on Oct 4 and ends at midnight on October 6. The August sales tax holiday covers: clothing and footwear costing less than $100 per item; a single purchase of personal computers and PC-related accessories costing less than $1,000 per item, and general school supplies to be used in the classroom or in classroom-related activities with a sales price of less than $20 per item.  Excludes items to be used by a business.  The October sales tax holiday covers energy and water efficient products defined by the statute, with a price of $1,500 or less per item. (See the definition at the link above.)
  • Iowa Sales Tax Holiday: August 2-3. Covers: Select clothing and footwear only. See list
  • Louisiana Sales Tax Holiday:
    • TPP Holiday: August 2-3. The first $2,500 of the total purchase price of most goods sold for non-business use is exempt from state sales taxes.
    • Louisiana’s Hurricane Preparedness Sales Tax Holiday took place on Saturday, May 25 & Sunday, May 26. See list at the link above for covered products.
    • Louisiana Second Amendment Tax Holiday: September 6-8. Covers: Firearms, ammunition, and hunting supplies.
  • Maryland Sales Tax Holiday: August 11-17. Covers Clothing and footwear with a normal retail price of less than $100 per item. Note: school supplies and computers are not covered by the Maryland sales tax holiday.
  • Massachusetts Sales Tax Holiday: August 10-11. Covers: “Otherwise taxable non-businesses purchases except purchases of telecommunications services, gas, steam, electricity, motor vehicles, motorboats, meals, and any single item with a price in excess of $2,500.”
  • Mississippi Sales Tax Holiday: July 26-27.  Covers: Clothing and footwear costing less than $100 per item.
  • Missouri:
    • Back to School: Begins at 12:01 a.m. on August 2, ends at midnight on August 4. Covers: Certain back-to-school purchases, such as clothing, school supplies, computers, and other items as defined by statute.
    • Show Me Green: April 19-25. Covers: energy-efficient appliances.
  •  New Mexico Sales Tax Holiday: August 2-4. Covers: Certain clothing, computer, school supply, and digital accessory items; see the list at the link above.
  • North Carolina Sales Tax Holiday:  Starts at one minute after midnight on August 2, and ends at 11:59 p.m. on August 4. Excludes items purchased for business use; see the list for details of tax-free items, including computers and accessories costing up to $3,500.
  • Oklahoma Sales Tax Holiday: August 2-4.  Covers: Clothing and shoes.
  • South Carolina Sales Tax Holiday: Starts at 12:01AM ET on August 2 and ends at midnight the August 2.  Covers: clothing, shoes, bedding, towels, computers, but items used in business are not included. See the list at the link above.
  • Tennessee Sales Tax Holiday:  August 2-4. Covers: Clothing, shoes, school supplies, computers. If an item is tax free, anyone may purchase it without paying sales tax during the tax-free weekend. See the list for details on covered supplies and computer items.
  • Texas Sales Tax Holiday: August 16-18. Covers most clothing, footwear, school supplies and backpacks priced under $100.
  • Virginia Sales Tax Holidays:
    • May 25-31, 2013: Hurricane and Emergency Preparedness Equipment
    • August 2-4, 2013: School Supplies and Clothing
    • October 11-14, 2013: Energy Star and WaterSense Qualified Products
    • See the list at this link for details.

Photo Caption: Photographer Pam Lane offered this photo on Flickr under a Creative Commons License.

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