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Everything You Need to Know About Back to School Sales Tax Holidays
byJuly 6, 2022
Back to school shopping season is here, and given that inflation is already causing costs to increase across the board, consumers are approaching back to school shopping cautiously. A survey done by inMobi shows that 1 in 4 consumers has already spent more on school supplies in 2022 than 2021, with clothing and snack purchases leading the way.
One way states have tried to counteract the expense of school supply shopping is by creating sales tax holidays that feature eligible items like backpacks, apparel, tennis shoes, and other school supplies. However – not every state has a back to school sales tax holiday, and for those states that do, not everything on the school supply list is covered under the tax exemption.
You can find a full list of 2022 Sales Tax Holidays, including those aimed at back-to-school purchases, here.
In addition to being on the lookout for sales tax holidays, you’ll want to be aware how some common school related items are taxed year round.
The majority of states have decided that clothing purchases are subject to sales tax. This includes school uniforms. However, the back to school sales tax holidays mentioned above often include a sales tax break on clothing and shoes under a certain price tag. For retailers, it’s crucial to be aware of when these holidays come up, so you can be sure to exempt sales tax when necessary.
Seven states currently exempt clothing from sales tax, or have exemptions that might impact back to school retail sales. Find a list of those states here.
Back to school supplies
School supplies such as computers, writing utensils, calculators, and backpacks are generally taxable, like most tangible personal property. However, these items are generally covered under back to school sales tax holidays at a certain dollar amount.
While books are almost always taxable, textbooks are different. Certain states exempt textbooks from sales tax, and we have a full state-by-state list of textbook taxability here.
Determining the taxability on grocery items is always a challenge for food retailers. There is a lot of nuance in the grocery category – was the grocery item sold hot or with utensils? If so, it’s likely taxable. To determine if you should be charging sales tax on your grocery products, check out our grocery taxability guide.
The importance of sales tax holidays
Tangible personal property is almost always taxable. However, with sales tax holidays in the mix, things can get complicated for retailers. How can sellers ensure they are collecting sales tax on the right items, at the right time? Having an automated sales tax solution like TaxJar might be the answer for your business.
The TaxJar API honors sales tax holidays and keeps you compliant. Just set your product codes and we’ll make sure you’re not charging sales tax on non-taxable products during back to school sales tax holidays in 2022.
It’s important to keep in mind that sometimes states approve sales tax holidays mid-year. To receive the most up-to-date sales tax news, subscribe to our sales tax newsletter. Ready to automate sales tax? Get started with your free, 30-day TaxJar trial here.