Back to School: Time for a Sales Tax Holiday

by Miranda Marquit · 0 comments

Now that summer is almost over, it’s time to start thinking about back to school shopping. I just finished buying clothes for my son. The school provides all his other supplies, and he’s not old enough to need a laptop for school, so the whole process was fairly straightforward and simple.

For many back to school shoppers, though, things aren’t so quick and easy. If you have multiple children — especially if they have different school supply needs — you might have a long list of supplies. On top of that, things can get expensive.

One way to save money is to take advantage of sales tax holidays. A number of states offer sales tax holidays. These events provide consumers a way to save money, since they don’t have to pay sales tax on their purchases. For some, this can lead to reasonable savings on back to school items.

Some consumers even drive to neighboring states that hold sales tax holidays in order to take advantage of the potential savings. Before you drive to another state, it’s a good idea to think about the situation and decide whether it’s truly worth it for you.

First of all, it’s important to note that sales tax holidays don’t usually include everything. There usually isn’t a blanket holiday. Instead, many states only offer the holiday on specific items. Before you drive to another state, take a look at the list of items that qualify. Some states offer holidays on clothing, while others only offer it on school supplies. There are some states, like Alabama that offer the holiday on clothing, computers, books, and school supplies.

Compare your list of school needs to what is offered in your state for the holiday, or the surrounding states. Make sure that, if you make the drive, you will receive the benefit for the items you actually need.

Another consideration is that many states have limits as to how much you can save. You might only be able to save sales tax up to a certain purchase amount. For instance, in some states you only get the sales tax exemption on the first $100 you spend on clothing, or you might only save on the first $1,000 you spend on a computer.

It’s important to understand the maximum you can save with a sales tax holiday. Compare that with how much you can expect to spend on gas if you drive to another state. It’s vital that you take into account what you will spend getting to your shopping location. If you are close to the border, it can make sense to head over.

However, if you have to drive farther, it might not make sense. If the amount is limited, or if you can’t get all of what you need, it might not be worth it to drive so far. Make sure that you really will be saving enough to warrant the drive to another state. Run the numbers; it might be worth to stay local if you won’t actually come out ahead by heading somewhere else.

A sales tax holiday can be a great way to save a little cash at back to school. Just make sure that you run the numbers first.

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