The popularity of sales tax holidays is dismaying to many tax policy experts, who say the events offer shoppers a modest break at best and are often not well targeted to consumers who most need the savings. “State tax holidays tend to be political gimmicks,” Mr. Walczak said.
Some research suggests the holidays may simply shift the timing of purchases and, therefore, have limited net economic impact. And a report from the Tax Foundation says retailers may sometimes raise prices during the events.
“What we’re seeing is a lack of imagination about what to do in trying times to help people,” said Dylan Grundman O’Neill, senior state tax policy analyst with the Institute on Taxation and Economic Policy.
Still, that doesn’t mean an individual consumer may not benefit from buying specific items during tax holidays, he said, which helps explain why both politicians and consumers like them. “We all like to feel we’re getting a good deal.”
Here are some questions and answers about state tax holidays:
Where can I get information about sales tax holidays in my state?
Most state revenue departments offer details online about how the sales work, including dates and lists of items covered.
How much can I save during a sales tax holiday?
It depends on the state and the item purchased. All but five states charge sales taxes, ranging from 4 percent of the sale to more than 7 percent, and some also have local sales taxes that can push the combined rate above 9 percent. Most states cap the amount of purchases exempt from tax during the holiday. Some require cities and towns to participate, while others make the tax holiday optional.
Do state sales tax holidays apply to items bought online?
Yes. The tax exemption applies if the item is bought online during the tax holiday, even if it is delivered after the holiday ends, according to state websites. But items bought online and delivered out of state are generally subject to sales tax in the state where the item is received, said Scott Peterson, vice president of U.S. tax policy and government relations at Avalara, a provider of tax compliance software.
Article source: https://www.nytimes.com/2022/06/17/your-money/tax-free-shopping-state-holiday.html
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