This year, he said, the thinking among state legislators may be that people have been suffering with virus-related shutdowns, civil unrest and now heat waves, so why not offer a bit of relief. “They’re ‘feel good’ measures,” he said.
Still, the drain on state revenue, combined with the incentive to crowd into stores looking for bargains when coronavirus cases are surging, suggests that 2020 may have been a good year for states to skip the tax holidays, said Dylan Grundman, senior state policy analyst at the Institute on Taxation and Economic Policy. “They should have called them off this year,” he said.
Here are questions and answers about sales tax holidays:
How much can I save during a sales tax holiday?
State sales taxes range from about 4 to 7 percent but can be as high as 9 percent when additional local option sales taxes are included. Most sales tax holidays include state and local taxes, but some exclude local taxes or make them optional, reducing the savings.
Your savings may also be limited by a dollar cap on purchases, whether it is based on the cost of an individual item or on the total receipt.
I’m not comfortable shopping in stores because of the pandemic. Can I get the tax break by shopping online?
Generally, online purchases are eligible for the tax break, tax experts say. But that option may not help lower-income workers, who may lack internet access or the flexibility to be home from work to receive deliveries, Mr. Grundman said.
What states are holding sales tax holidays this year?
States holding sales tax promotions in 2020, according to the Federation of Tax Administrators, are Alabama, Arkansas, Connecticut, Florida, Iowa, Maryland, Massachusetts, Mississippi, Missouri, New Mexico, Ohio, Oklahoma, South Carolina, Tennessee, Texas and Virginia.
Alaska, Delaware, Montana, New Hampshire and Oregon don’t charge statewide sales taxes in the first place. And other states may exempt clothing and food from sales tax, at least up to certain limits, year round.
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