Tax-free weekend: what to buy, where to buy it

Savvy shoppers, mark your calendars. Just in time to usher in back-to-school shopping, more than 15 states will be celebrating a tax-free weekend in August, meaning consumers will be able to save hundreds of dollars on items like computers, school supplies, and clothing. Here’s what you need to know before you pull out your wallet. 

What is a tax-free weekend?

States that participate lift their normal sales taxes for certain items, typically from 12:01 a.m. on Friday to midnight on Sunday. Depending on the state you live in and how high taxes are, you could save anywhere from 4 to 9 percent on your purchases. (The lucky residents of Delaware, Montana, New Hampshire, and Oregon never pay state sale taxes.)

Which states have tax-free weekends?

The bad news: Not every state does. While some states annually cut sales taxes for a weekend to encourage shopping and ease the costs of back-to-school shopping, others say they are too financially strapped to give up tax revenue. Fear not, however. If your state doesn’t celebrate a tax-free weekend, you can still drive to a neighboring state to participate. Just be aware that you may be subject to “use taxes” (a levy your home state collects when you buy some items out of state) when you return home. Call your state’s Department of Revenue, or skim over this list to check if your state will celebrate a tax-free weekend this year: http://www.taxadmin.org/fta/rate/sales_holiday.html

When is my state's tax-free weekend?

Most of the tax-free weekends we’ve seen will fall on August 2 – 4, but some states are holding the weekend later in August. Make sure you double-check dates before you start splurging. 

Are all items tax-exempt?

Despite its name, a tax-free weekend is not necessarily the time to buy a new car for the family. Most states will only exempt taxes for certain types of items, including school supplies, clothing, computers, and books worth up to a few hundred (or even thousand) dollars. Again, check your state’s policy for specific information.

What are the best items to buy?

The best deals are on laptops. At any other time in the year in Missouri, if you buy the $1,499 MacBook Pro your teen has been eyeing, you would actually pay $1,562 once the state’s 4.225% sales tax kicks in. Over the state's tax-free weekend, the same laptop would cost its advertised price, $1,499 — saving you a cool $63 that you can tuck away for other purchases.

Two other items worth holding off on until the sales tax holiday: clothing and shoes. A modest pair of sneakers may not seem that expensive, but when you keep paying sales taxes on shoes throughout the year, the costs can add up quickly. If your children are all in need of new gym shoes, then, you could save money by bundling your purchases. For instance, in Connecticut, you can spend up to $300 on clothing and footwear over that state's sales tax holiday before you pay sales tax. Compare that to other times in the year, when you’d pay a 6.35 percent sales tax on any item you buy.

Does it work? Do people actually spend more during tax-free weekends?

The answer is a resounding yes. Families with young children spend 295 percent more on shoes and 117 percent more on children’s clothing during sales tax holidays, according to a Federal Reserve Bank of Chicago study. It's a great time for retailers. The National Retail Federation says stores in states that have tax holidays see "significant increases" in sales during the tax-exempt period.