How Does a Tax Free Weekend Work?

Studies show that parents spend, on average, more than $650 per child on back-to-school supplies. This number is even higher for adult children heading off to college. With ongoing inflation concerns and rising costs, you, like many other parents, are likely looking for ways to reduce these costs as much as possible.

If you’re lucky enough to live in one of the states that offer tax-free weekends right before school starts, this may be one of your best chances for saving money on clothes, shoes and school supplies. While these events can’t show you how to get more money on your tax return, they can help you save money on sales tax on the supplies you buy now.

What is a tax-free weekend? Keep reading to find the answer to this question and see if your state participates.

What Is a Tax-Free Weekend?

As the name suggests, tax-free weekend is a designated weekend, or in some cases even longer, when the state agrees not to collect sales tax on specific items. The idea for tax-free weekends started as a way of helping parents offset some of the costs for back-to-school supplies, such as clothing, shoes and computers. Many states also set limits on what items are tax-free. For example, in many states, only clothing items that cost $100 or less are eligible.

These weekends include both in-store and online purchases. Each state has its own rules for which items you can purchase tax-free and which you can’t. It’s important to understand the specific details of your state before you start shopping.

How Many States Have Tax-Free Weekends?

The number of states scheduling these weekends seems to grow every year. In 2022, a total of 20 states held one or more tax-free weekends, or weeks, during the year.

What States Do Tax-Free Weekends?

First, it’s important to note that five states, including Alaska, Delaware, Montana, New Hampshire and Oregon, don’t have a sales tax, so it makes sense that they wouldn’t participate in these events. Out of the other 45 states, 20 held at least one tax-free weekend.

Participating states in 2022 were:

Alabama
Arkansas
Connecticut
Florida
Illinois
Iowa
Maryland
Massachusetts
Mississippi
Missouri
Nevada (only for members of the National Guard)
New Jersey
New Mexico
Ohio
Oklahoma
South Carolina
Tennessee
Texas
Virginia
West Virginia

When Does Tax-Free Weekend Happen?

When is the tax-free weekend? That depends on where you live. Because tax-free weekend is not a national event, each state sets its own dates and determines how long the event will last. For example, Iowa’s tax-free event runs from Friday to Saturday, while New Jersey holds weeklong tax-free events.

Additionally, some states are starting to hold two tax-free events each year. For example, Florida holds its standard back-to-school tax-free event in late July but also has a tax-free event for outdoor recreational items in early July. Some states are also holding special tax-free events. For instance, in 2022, Tennessee held a tax-free event on groceries for the entire month of August as well as a year-long tax holiday on gun safety products such as gun safes.

When Does Tax-Free Weekend Start?

Because the main goal for tax-free weekends is to help parents offset the cost of school supplies, most states hold their event close to the beginning of the school year. For instance, states with an early start date for school, including Alabama, Mississippi and Florida, typically hold their weekend in July, while other states, such as Missouri, Oklahoma, and South Carolina, wait until August to hold their tax-free weekend.

You can check with your state offices to find out exactly when it starts in your state. Because these tax-free events include online sales, most events begin just after midnight, at 12:01 a.m. on the first day of the event.

When Does a Tax-Free Weekend End?

For a majority of participating states, these events last the entire weekend, including Friday, Saturday and Sunday. Some states, such as Iowa and Arkansas, only hold 2-day tax-free events, while other states, including Florida, New Jersey and Illinois, have weeklong events. Because most of these events begin just after midnight on day one, they often end just before midnight at 11:59 p.m. on the last day of the event.

How to Prepare for a Tax-Free Weekend

If you’re fortunate enough to live in a state that holds tax-free weekends, you want to make sure you head into this event prepared. Here’s a list of tips that can help you make the most of these tax-free events.

Find Out What’s Included

The last thing you want to do is get to the register just to find out some of the items you want to purchase aren’t tax-free. You can avoid this hassle by checking your state’s list of eligible items. If you’re shopping online, make sure no tax was added to eligible items. If you’re shopping in-store, always double-check if you’re not sure what items are tax-free.

Know the Limits

Most states also set limits on how much an item can cost to remain tax-free. In almost all cases, these limits are based on the price per item and not the total of everything you purchase. Be sure to check these limits and track the items you’re purchasing to make sure you don’t purchase ineligible items.

Set a Shopping Budget

Before the event starts, sit down and set a shopping budget. This step can make sure you stay focused on purchasing the things you need the most and prevent you from spending too much money.

Look for Bargains

Tax-free weekends don’t affect the stores’ profits. So, in an attempt to attract the most customers, many stores run sales during these special events. Check out various stores’ online ads to find out which ones are offering the best deals on the school supplies you need most.

Focus on Big-Ticket Items

If you want to get the biggest bang for your buck, focus on purchasing the most high-value items on your shopping list first. This practice can help you save the most amount of money. Just be careful that all the items you purchase are under the eligibility limits.

Prepare for Tax Season

Don’t miss out on the significant amount of savings you can receive at these tax-free events. Do your research and plan ahead. The same can be said about filing your taxes at the end of the year. You always want to do your research and understand how the IRS determines how much tax you owe.

Unless you plan to have a professional complete your taxes, you also want to know how to do taxes. Understanding how the tax filing process works and what credits and tax deductions you can take can help minimize your overall tax burden. If you need more help with your taxes, check out Credit.com’s tax center.

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