How To Figure Out If Tax Holidays Are Really Worth It

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A state tax sales holiday eliminates the tax due on the goods and services you purchase during a defined timeframe. However, you should already be planning to spend money, so you don't give in to impulse buys.

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Sales tax holiday

While there are no federal tax holidays, many states offer a discounted tax rate or no tax when you purchase specific products or services. 

Overview

Less than two dozen states engage in a tax-free holiday — see a full list on the Sales Tax Institute chartThe discount often occurs during July, August, or September to help back-to-school shoppers save money. Some southern states also have a holiday for disaster preparedness items.
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Duration

The tax sale can last from a couple days to one week depending on the state. The rules may also limit the holiday to specific categories and a maximum value. Tax-free states display the rules on their Department of Revenue website or sales & use tax page.

Category examples: clothing, shoes, accessories, school supplies, textbooks, furniture, televisions, energy star appliances, and computers.

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Savings

Paying no sales tax can motivate consumers to increase their spending, but you need to be careful. If you weren't planning to make a purchase, then it may be better to postpone it. 

Here's the breakdown: If your state charges 4% sales tax and you buy a qualifying item on a tax-free weekend, you save $4 for every $100 you spend. Unless you're spending hundreds of dollars, you will not experience a significant windfall.


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