When it comes to taxes, every little break helps, which may be why tax holidays are so popular.
Each year, a number of states give consumers a break on paying sales tax, for a couple of days or up to a week, on items like clothing, footwear, school supplies, and even computers. In 2015, sixteen states have a tax holiday, and several (Georgia, Louisiana, Maryland, Mississippi, Missouri, Texas, and Virginia) have more than one.
How valuable are these tax breaks? With sales taxes ranging from around 4 percent to 7 percent, you can save anywhere from a few dollars on items of clothing to $100 on a computer. For energy- and water-efficient appliances in a few states, you could save several hundred dollars.
There are a few caveats. Each state has rules and price limitations on what is exempt from sales tax. Municipalities in the various states may get to decide whether or not they want to participate in the tax holiday, and some local sales taxes may still apply. You can look up your state’s sales tax holidays here. A breakdown of this year’s remaining holidays and those coming up in 2016 follows.
Upcoming Tax-free Days
August: Every one of the 16 participating states offers tax breaks this month. Most breaks are for clothing and back-to-school supplies. About half of the states also waive taxes on computers, computer components, and software. In Virginia, energy-efficient and water-efficient appliances (up to $2,500 per item) are exempt from sales tax.
October: During the first weekend in October, Georgia offers tax breaks on Energy Star and WaterSense products costing up to $1,500.
Tax Breaks in 2016
February: Alabama and Maryland generally set aside a few tax-free days in February. In Alabama, it’s typically at the end of February. You can avoid the state’s 4 percent sales tax on severe-weather preparedness items that cost $60 or less and on generators up to $1,000. Maryland waives its 6 percent sales tax on all Energy Star products around Valentine’s Day weekend.
April: Missouri’s annual Show Me Green campaign gives consumers a 4.225 percent sales tax break on new Energy Star appliances up to $1,500 for the week of April 19-25.
May: Over Memorial Day weekend, Texas residents are also encouraged to buy Energy Star appliances. They can save 6.25 percent or more on up to $6,000 for air conditioners, $2,000 for refrigerators, and a variety of other household items. Louisiana waives its 4 percent sales tax during the last Saturday and Sunday in May to help consumers prepare for hurricane season; generators (up to $1,000) and other preparedness supplies (up to $60) are exempt.
More Ways to Save
What’s worth even more than a sales tax holiday? Getting as much as 50 percent off of a purchase. Look for local sales on appliances and electronics, which are often discounted at the end of their respective seasons. For instance, air conditioners are cheaper at the end of summer, when dealers are stuck with inventory. Sites like Consumer Reports and LifeHacker offer month-by-month guidance on the best times to buy practically anything.
And if you really like value, research the additional savings offered on Energy Star products via federal and state tax credits, as well as rebates from your local utilities.
Eva Rosenberg, EA, is the publisher of TaxMama.com®, where your tax questions are answered. She teaches tax professionals how to represent you when you have tax problems. She is the author of several books and e-books, including Small Business Taxes Made Easy. Follow her on Twitter: @TaxMama
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