In a Nutshell
Some states waive state sales tax on certain weekends during the year. Whether shopping online or in a store aisle, consumers don’t pay state sales tax on qualifying items, usually up to a max amount, during tax-free weekends. Tax-exempt items often include school supplies, but the list might also include other consumer goods.This article was fact-checked by our editors and a member of the Credit Karma product specialist team, led by Senior Manager of Operations Christina Taylor.
Whoever said taxes are a certainty must not have known about tax-free weekends.
Every year, some states give consumers a break from paying sales tax on eligible items, which are usually geared toward school shopping and emergency preparations. But not every state hosts one, and the time frames and the rules vary in the states that do.
Still, all tax-free weekends (also known as tax holidays) have one thing in common: Shoppers don’t pay state (and sometimes local) sales tax on qualifying purchases. Here’s some info about how tax-free weekends work.
- What is a tax-free weekend?
- Why are sales-tax holidays important?
- Things to know about tax-free weekends
- How do I find out if my state has a tax-free weekend?
What is a tax-free weekend?
The “tax” in tax-free weekends refers to sales taxes. During tax-free weekends, select goods are exempt from state (and sometimes local) sales tax.
New York launched the first modern sales-tax holiday in 1997 but has since replaced it with a permanent tax break on qualifying clothing and footwear purchases under $110. Since the ’90s, several more states have experimented with sales-tax holidays. State lawmakers pass legislation establishing these annual sales-tax holidays and set the time frames, tax-exempt items and price caps.
What items are exempt from tax during a tax-free weekend?
The types of merchandise exempt from sales tax can vary from state to state. For states with tax-free weekends, it’s common for school supplies to be exempt. Some states may exempt computers, while others include Energy Star appliances in the sales tax holiday.
Other states waive sales tax on some items you may find surprising. Mississippi exempted the sale of hunting supplies, including firearms and ammunition in 2019. During one of Texas’ sales tax holidays (it had three in 2019), the state allowed consumers to forgo sales tax on up to $6,000 of the cost of an air conditioner, $2,000 on refrigerators and on any amount spent on water-conserving products.
Learn how sales tax worksWhy are sales-tax holidays important?
Sales taxes directly affect how much you pay for products and services. In 2019, 45 states and the District of Columbia had sales taxes. And some states also have local-level sales taxes in addition to state sales taxes.
A sales tax holiday can help you save money on items you’re already planning to purchase. Though you may not have to be a student or the parent of a student to take advantage of these tax-free weekends, many of them are timed to start just before the school year begins. That’s when families are getting ready to shell out around $700 for school supplies on average, according to National Retail Federation data.
Each state sets its own sales tax rate. But let’s say you live in Massachusetts, where the sales tax rate is 6.25%. If your entire $700 back-to-school bill qualifies as tax free, then you would save $43.75 during the sales-tax holiday.
Things to know about tax-free weekends
Each state decides whether it will have a tax-free weekend, sets its own dates, decides which items will be tax free and establishes its own policies, such as applying local taxes.
What can I buy tax free?
Head to your state’s tax website to read the fine print because what’s tax free can vary by state. For example, Texas hosts three different sales-tax holidays every year. During its back-to-school weekend, clothing, footwear, school supplies and book bags under $100 are tax free in a Texas store, online or when ordered from a catalog. But you pay taxes on items such as sports pads, ballet shoes, and soccer cleats, along with any exempt items that cost more than $100.
Massachusetts recently passed a law calling for one sales-tax holiday weekend a year — the first one was in August in 2019, but it offers one of the most generous price caps: Eligible retail items up to $2,500 are exempt from sales tax. Meals, cars, marijuana (which is legal in the state) and a few other items don’t qualify for this tax-free holiday, though.
Can I shop tax-free weekends online?
You probably won’t have to forgo the convenience of online shopping during a tax-free weekend. Check your state’s rules. Typically, as long as the online retailer does business in your state and you purchase qualifying items, you won’t have to pay sales tax. Some popular online retailers, such as Amazon, are up to speed on these tax-holiday rules and can automatically take sales tax off your eligible purchases during sales tax holidays.
How do I find out if my state has a tax-free weekend?
Check out this table to see whether your state may have a tax holiday. States establish sales-tax holidays through legislation, which usually specifies the time frame for the sales-tax holiday. We’ve listed those time frames in our chart and provided links to sales-tax holiday information on each state’s website.
Be sure to refer to the state’s website for the most up-to-date information for tax-free weekend dates and what items will be included in the holiday.
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Bottom line
A tax-free weekend can help you save on sales taxes a few days a year. But if you don’t live in a state that hosts one of these holidays, then you may get a tax break elsewhere. For example, Alaska and Delaware don’t impose state sales taxes at all (though local or gross-receipts taxes may apply), while some states forgo state income taxes.
And remember, if you itemize deductions on your federal income taxes, you have the option of deducting sales tax you paid during the tax year (within limits). If you go this route, be sure to hold onto your receipts so you can document your deduction.
Christina Taylor is senior manager of tax operations for Credit Karma. She has more than a dozen years of experience in tax, accounting and business operations. Christina founded her own accounting consultancy and managed it for more than six years. She codeveloped an online DIY tax-preparation product, serving as chief operating officer for seven years. She is an Enrolled Agent and the current treasurer of the National Association of Computerized Tax Processors and holds a bachelor’s degree in business administration/accounting from Baker College and an MBA from Meredith College. You can find her on LinkedIn.