Saving Money on Back to School Shopping with Tax Free Holidays

Posted on 07/22/2013

No need to clip coupons-- tax-free weekends are an automatic savings for savvy back-to-school shoppers. At least 15 states will enjoy tax-free holidays in August which is a key time to save money on must-haves like school supplies, tennis shoes and clothes.

Understanding What's Tax-Free
The purpose of sales tax holidays is to entice shoppers to spend money by giving them the incentive of a discount. It's also a way to help parents save cash on back-to-school shopping expenses, however you don't have to have a child to take advantage of the savings. There are some stipulations on what's tax free. Many states put a cap on how expensive an item can be in order to qualify for the tax exemption. Find a full rundown at

What's Exempt
Because the purpose of these holidays is mainly to help parents most states will only exempt taxes on things like clothing, school supplies and computers. You'll still have to pay sales tax on a new car so don't use this as an excuse to hit up the dealership for some test drives.

August Tax Holidays
Many states set their tax free holidays during the first weekend in August. Twelve states including Alabama, Iowa and South Carolina hold their tax-free weekends August 2-4 this year. Other states hold their tax holidays a week later, August 9-11. These states include Georgia and Texas. Shoppers in Maryland enjoy a full week of tax-free shopping. Maryland's sales tax holiday runs from August 11-17.

Who Buys the Most
According to a study by the Federal Reserve Bank of Chicago, married parents with young children are the most likely to take advantage of a sales tax holiday. Households with incomes greater than $70,000 increased the number of children's clothing items purchased by 136 percent on these special tax holidays.

Expected Savings
So how much savings can you expect to pocket? That depends on what your state charges for sales tax. In Mississippi where the sales tax holiday is earlier than most states, running July 26-27, shoppers will save 7 percent. So on a $100 pair of tennis shoes that's a $7 savings. According to the National Retail Federation, the average family will spend $634.78 on apparel, shoes, supplies and electronics during their back-to-school shopping trips. That means the average family would keep about $45 in their wallet just by shopping on a sales tax holiday weekend.

By Alison Storm

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