This weekend, consumers can do some back-to-school shopping and save on sales tax during the state’s second annual sales-tax holiday.
But don’t get too excited.
While you can save a little bit of money on certain items, our state isn’t as generous in what it’s exempting from tax this weekend as others. The sale starts at 12:01 a.m. Friday and lasts through 11:59 p.m. Sunday.
In Ohio, the sales-tax holiday is limited to smaller item back-to-school supplies and clothing (and not, say, a new television). Several states also allow back-to-school computer purchases, but Ohio’s holiday does not.
To be fair, no states this year are offering a sales-tax holiday on general large-purchase items and are limiting the tax break mostly to school supplies. Massachusetts actually bailed on the sales-tax holiday this year, the first time since 2009, saying it was too expensive to the state. Its previous sales-tax holidays gave a reprieve on sales tax for any purchases $2,500 or less.
In Ohio, qualifying items include:
• Clothing priced at $75 or less each.
• School supplies priced at $20 or less each.
• School instructional material priced at $20 or less each.
The tax break varies, depending on the sales tax in each county. In Summit County, the sales tax is 6.75 percent, meaning shoppers would save $5.06 in taxes on a $75 clothing purchase.
There is no limit on the number of items purchased. Merchandise bought for the use in a trade or business is not eligible.
The holiday applies to purchases made in a store or online, by mail, telephone or email. To qualify, the order must be placed, paid for and accepted by the retailer for immediate shipment during the holiday (actual delivery can be later).
There are some strange coupon rules with this tax-free weekend. Let’s say you have a store coupon for $10 and the piece of clothing you were buying was $85. By the store reducing that price to $75, your item would qualify for the tax-free holiday.
But if you had a manufacturer’s coupon, or something where the store will be reimbursed by a third-party, that discount will not qualify toward the item being tax-free.
I’m not sure I’ve ever seen a clothing manufacturer’s coupon, but stick with me for this example: Let’s say that same $10 coupon was a manufacturer’s coupon. Because the store will get reimbursed for it, our state’s wacky sales tax laws would not consider that to fall under the tax-free holiday. (If you’d like to read a column I wrote recently about our sales tax laws, go to www.ohio.com/betty)
As I mentioned above, not all states have the sales-tax holiday or the same kind. Ohio is one of 17 states in the country that offer the holiday, said Kay Bell, a tax analyst with www.bankrate.com.
“This is a balancing act that states have,” said Bell. “It’s tough economic times for states. They’re having to balance their shoppers — otherwise known as potential voters — and how they will effectively run their government” since states lose out on the sales-tax revenues when they offer the holiday.
Bell acknowledged that sales-tax savings aren’t “huge,” but “on the other hand, you’ve got to give the Ohio lawmakers the credit for having the forethought” to have the tax holiday, she said.
So is a tax-free holiday worth it for shoppers?
“Studies have found it generally doesn’t really add to the amount of shopping, it just time shifts it,” Bell said.
The Institute on Taxation and Economic Policy again this year called sales-tax holidays ineffective with minimal benefits for low-and moderate-income taxpayers.
“Sales tax holidays fall short because they are poorly targeted, cost revenue, can easily be exploited and create administrative difficulties,” the institute said.
According to the National Retail Federation, the average family with school-aged children plans on spending $673.57 on school clothes and supplies, up from last year’s $630.36. But people spent less in 2015 than 2014, when they spent $669.28. The organization said that pattern shows families stocking up on supplies one year and dropping the next as they try to get a second year out of longer-lasting items like computers and backpacks.
Bell said she doubts there will be Black Friday-type lines at any retailers to buy school supplies.
“I think it’s psychological as much as financial,” Bell said. “Everyone likes a bargain. If it’s getting money that otherwise might go to a tax collector, it’s icing on the cake. It’s not much, but dang it, it’s not going to the tax man.”
Bell suggests knowing the tax-exempt rules, making a list and sticking with it to “maximize your savings.”
Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com. Follow her @blinfisherABJ on Twitter or www.facebook.com/BettyLinFisherABJ and see all her stories at www.ohio.com/betty