Don't Mess With Taxes

Even in the midst of a global pandemic, some things must go on. Like state sales tax holidays.

Missouri's annual Show Me Green Sales Tax Holiday, a week of tax breaks on energy efficient appliances, began April 19 and runs through April 25.

As the Show Me State's first sales tax holiday of 2020 winds down, Texas' usual spring emergency supplies tax-free event kicks off. It runs April 25 through April 27.

Show me shopping where: Missouri residents who need new appliances could save if they opt to purchase Energy Star certified items. The state's 4.225 percent sales tax won't be collected on eligible purchases priced up to $1,500 per appliance.

Many Missouri cities, counties and other specific tax jurisdictions also are participating in the 2020 sales tax holiday. Those local sales taxes also will be waived on qualifying appliances purchased within their boundaries.

Click image to see a larger PDF map.

Show me shopping what: So what's eligible for the sales tax break? It applies to Energy Star certified clothes washers and dryers, dishwashers, refrigerators, freezers, water heaters, air conditioners, heat pumps and furnaces.

In addition, popular appliances that aren't officially rated by Energy Star also could be tax free. This includes conventional ovens, ranges, stoves and trash compactors. But Missouri lawmakers, anticipating that someday these appliances may be Energy Star OK, added them to the tax-free list.

Note the price cap: In addition to finding a qualifying appliance, Missouri shoppers need to pay attention to the product's price.

Only the first $1,500 is exempt from state (and local) sales tax. If a product costs more, the overage is taxable at the full rate. And the savings are calculated per appliance.

For example, a customer buys an Energy Star certified clothes washer and dishwasher. The washer costs $1,750 and the dishwasher costs $700. The first $1,500 of the purchase price of the clothes washer qualifies for the sales tax holiday exemption and the entire purchase price of the dishwasher qualifies for the sales tax holiday exemption.

The sales tax holiday price thresholds also include mandatory shipping and handling charges as a part of the appliance's total purchase price.

Online shopping option: Some might question why a state would continue a promotion that encourages people to interact while most of us are trying to keep our social distances to lessen COVID-19 infections.

For some, apparently, the savings are just too much to forgo.

"Even during challenging times like these, household appliances will need to be replaced," said Missouri Director of Revenue Ken Zellers. "The Show Me Green Sales Tax Holiday is always a great opportunity to save a little money on new energy-efficient appliances."

But Zellers also encourages tax holiday shoppers to continue following social distancing guidelines and choose curbside pickup when available.

Or, if you don't have to personally inspect an appliance to know that you want it, check with your local retailer about buying it online. Internet purchases of eligible items also are sales tax free as long as payment is made in full and the transaction is completed during the holiday period.

And don't worry about delivery timing. The tax-free appliance can be dropped off at your house after holiday.

Virtual Lone Star shopping, too: That same web-buying choice is emphasized by Texas Comptroller of Public Accounts Glenn Hegar as the Lone Star State's Emergency Preparation Supplies Sales Tax Holiday approaches.

"As this pandemic continues to spread, I want to remind all Texans this sales tax holiday applies to qualifying items they purchase online, from the safety of their homes," said Hegar.

If Texans decide to go out for the tax holiday, which could save shoppers up to 8.25 percent (6.25 percent collected by the state plus up to 2 percent local charges) in waived taxes, Hegar reminds these adventurous souls to practice strict social distancing measures.

Qualifying emergency products: As with prior spring tax holidays in Texas, the three-day period applies to products that could help residents deal with the strong storms (like the deadly tornadoes that hit East Texas this week), wildfires and hurricane threats encountered throughout the year.

There's no limit on the number of emergency products that can be purchased tax free. They include:

• household batteries, fuel containers and flashlights priced at less than $75;
• hurricane shutters and emergency ladders priced at less than $300; and
• portable generators priced at less than $3,000.

For purchases made online, any delivery, shipping, handling and transportation charges are part of the sales price.

Be sure to take that into account before buying. It could negate any expected tax savings. For example:

One of my Austin neighbors buys a rescue ladder online for $299. There's a $10 delivery charge, bringing the total sales price is $309. Because the total is more than $300, sales tax is due on the full $309 price.

The Texas Comptroller's website has a full list of eligible sales tax free items.

Note taxable exceptions: Hegar also notes that, since we're dealing with COVID-19, many of my fellow Texans might be looking to buy products they need for this medical emergency.

Hegar points out that several over-the-counter self-care items, such as antibacterial hand sanitizer, soap, spray and wipes, are always exempt from Texas state and local sales tax if they are labeled with a Food and Drug Administration (FDA) required "Drug Facts" panel.

However, other supplies that might be useful during an emergency (or while sheltering at home to avoid coronavirus exposure) are not tax free during the upcoming holiday. Items that will remain taxable include:

• medical masks and other face masks;
• cleaning supplies, such as disinfectants and bleach wipes;
• gloves, including leather, fabric, latex and types used in healthcare; and
• the ever-popular and still in short supply toilet paper

Shop safely: If you do shop during the remaining Missouri or upcoming Texas sales tax holidays, do so safely. Again, buy online if possible. If you must go to a store, follow the Centers for Disease Control and Prevention COVID-19 precautions.

You don't want to end up having to spend any tax savings on doctors' bills because you didn't follow coronavirus safety guidelines and got sick.

You also might find these items of interest:

• Tax holidays are popular, but bad tax policy
• 6 shopping tips to maximize sales tax holiday savings
• Storm Warnings: A collection of blog post links on preparing for, recovering from and helping those dealing with major natural disasters

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