Don't Mess With Taxes

It seems like only yesterday that parents were longing for the time that their kids would be back in class. Good news, Mom and Dad! That day is almost here.

And to help you get ready, 16 states are holding back-to-school sales tax holidays.

Most of the holidays, during which certain purchases are exempt from state and sometimes local sales tax collection, are in early August.

Mississippi, however, couldn't wait. The Magnolia State's sales tax holiday is this coming Friday and Saturday, July 30 and 31.

A few other tax holidays -- in Connecticut, Florida, Illinois, Maryland and Texas -- are set to start or run into the middle of the month.

The table below lists the upcoming back-to-school tax holidays alphabetically by state. UPDATE 8/4: Massachusetts adds 2010 holiday Aug. 14-15

Price limits and/or thresholds on tax-exempt purchases are per item unless otherwise noted. 

Lots of conditions apply: The state-name links in the table will take you to the official Department of Revenue websites where you can find more details on the holidays, such as exact starting and ending times, which cities and/or counties will (or won't) participate, and special purchase situations (lay-away plans, coupons, rain checks). 

Some of the notable rules and exceptions are pointed out in my Bankrate listing of tax holidays.

The "Full product listing" breaks out what purchases qualify. Check them out; some of the precise distinctions between what's tax-exempt and what isn't aren't exactly logical.

Or you can just read for fun. The legalese required in some cases is a hoot.

For example, the exemption for sport or recreational equipment that is tax-free during North Carolina's holiday applies to items "designed for humans to wear during athletic or recreational activities that are not suitable for general use."

That means that biking, skating and baseball helmets are tax-free during the Tar Heel holiday under the "sport or recreational equipment" definition as long as each item's sales price is $50 or less.

Fine. Good. But what lawmaker or legislative staffer (or more likely, attorney) decided the word "humans" was necessary? Are there that many people buying the tax-free bicycle helmets allowed under this provision for their pets?

North Carolinians, I'm not picking on y'all. The designation is common. Clothing is defined in most state tax-exempt lists as apparel for humans. Really? That many people across the United States dress up their dogs?

New, old, maybe: If you're looking for Georgia's sales tax holiday, sorry. The Peach State decided it couldn't afford to forge sales tax collections this year.

The District of Columbia decided it, too, was too cash-strapped to give up any 2010 sales tax revenue.

But Illinois is part of the tax holiday parade for the first time ever.

And Massachusetts lawmakers are still debating whether they'll OK a tax holiday. The Bay State House has passed a bill authorizing the event on one for Aug.14-15, the governor says he's for it, but the Senate has yet to give its stamp of approval.

A few states already had holidays earlier in 2010, most notably offering savings on hurricane season supplies.

And in addition to these 16 back-to-school tax holidays, some states will hold special no-tax events later in the year. I'll let you know more about those as those dates near.

Shoppers love 'em, tax analysts don't: Are tax holidays a good idea? It depends on who you ask.

Retailers don't like the extra administrative duties necessary to deal with specific no-tax items, but they tend to like anything that gets shoppers into their stores.

And, as indicated by Georgia's legislature, lawmakers are torn about the fiscal wisdom of such events. In fact, notes Stateline.org in an article on tax holidays, "critics on both sides of the political spectrum say sales tax holidays are an ineffective gimmick."

Tax think tanks generally dismiss tax holidays.

The Tax Foundation says that sales tax holidays don't actually encourage shoppers to buy anything. Rather, shoppers purchase items they would've bought anyway, but on a different day.

The organization elaborates in a new report on the holidays, which it characterizes as politically expedient, but poor tax policy.

Citizens for Tax Justice (CTJ), a group that focuses on taxes and how they help or hurt lower-income individuals, says the holidays says don't really help poorer families save money on essential items, a frequent argument made in support of the tax-free events.

Rather, says CTJ, sales tax breaks actually are geared toward upper-income families who are more financially able to shift the timing of their purchases to take advantage of the sales tax savings.

But the arguments for and against sales tax holidays are moot. The reality is that in 2010, lots of states are offering them. That's been the case for decades and it's likely to be the case for years to come.

So if your state, or a neighboring one that's close enough to make a trip there worthwhile, is holding a sales tax holiday, my suggestion is to check out exactly what's tax-free, make your shopping list accordingly and take advantage of it to avoid paying sales taxes on those items.

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• Memorial Day sales tax holidays
• Show Me sales tax savings
• State use taxes tend to be useless
• State Tax Departments
• Hawaii's accidental tobacco tax holiday
• 2009's tax holidays on tap today