Sales tax holidays and taxability of clothing/back to school (part 1)

Returning to class probably doesn’t make too many students think of the word “holiday,” but tax jurisdictions have other ideas.

In recent years, families have spent almost a grand each on back-to-school clothing and supplies. This time of year is a trove for online sellers of these products and states seem to realize it’s time to ring the bell on sales tax breaks for back-to-school.

These holidays are limited times (frequently weekends) when a state allows sales tax to be eliminated or reduced on categories of consumer products. Eligible purchases are often limited to a dollar amount. Local taxes may apply in some cases.

Here’s what’s happening this month.

In July

Puerto Rico, July 14-15, 2023, Jan. 4-5, 2024: School uniforms not including strap buckles sold separately, patches and emblems sold separately and accessories or equipment that constitute incidental items such as briefcases, cosmetics and hair articles, among other items.

Sports and recreational equipment, designed for human use and used in conjunction with or as part of a creative or sporting activity and not for general use.

School materials such as folders, pens, calculators, adhesive tape, scissors, chalk, crayons, paper, erasers among other items. School art or music materials and instructional school materials, such as clay and enamels, paint, brushes, drawing and sketchbooks and musical instruments, among others.

Online purchases qualify when the item is paid for by and delivered to the buyer during the exemption period.

Alabama, July 21-23: $100 or less, per article of clothing, includes all “human-wearing” apparel suitable for general use. Accessories (such as belt buckles sold separately), protective equipment and sports or recreational equipment do not qualify.

Computer laptops, desktops or tower systems consisting of a central processing unit and devices such as a display monitor, keyboard, mouse, and speakers sold as a package. (Computer parts and devices not sold as part of a package with the CPU, will not qualify.) An item commonly used by a student in a course of study in which a computer is used: computer storage media; diskettes, compact disks, handheld electronic schedulers and PDAs (except cell phones) printers and printer supplies.

School supplies, school art supplies, and school instructional material with a sales price of $50 or less per item (non-commercial purchases). Books $30 or less (magazine, newspapers and periodicals excluded).

Florida, July 24-Aug. 6, 2023, and Jan. 1-14, 2024: Certain clothing, footwear, and accessories with a sales price $100 or less per item; certain school supplies with a sales price of $50 or less per item; learning aids and jigsaw puzzles with a sales price of $30 or less; and personal computers and related accessories purchased for noncommercial home or personal use with a sales price of $1,500 or less.

Mississippi, July 28-29: Clothing, footwear and specific school supplies priced less than $100.

Tennessee, July 28-30: General clothing that costs $100 or less per item, such as shirts, pants, socks, shoes, dresses, among other items; items such as jewelry, handbags or sports and recreational equipment.

School and art supplies with a purchase price of $100 or less per item, such as binders, backpacks, crayons, paper, pens, pencils, and rulers, and art supplies such as glazes, clay, paints, drawing pads, and artist paintbrushes. Computers for personal use with a purchase price of $1,500 or less; storage media like flash drives and compact discs, individually purchased software and printer supplies are not exempt.

Next time we’ll look at back-to-school and clothing sales tax by state holidays that start in August.

If you need help figuring out sales tax wrinkles like tax holidays including school supplies and clothing sales tax, get in touch. TaxConnex has experts to help answer these questions and to help you establish an ongoing process to ensure you remain compliant.