Don't forget about sales tax holidays

While kids get a break from school over the summer, parents don't exactly get a break from spending. That is particularly true as summer draws to a close and back-to-school shopping takes charge over household finances. Whether its pencils and paper for kindergarten or college dorm furniture, parents can expect to shell out quite a lot in the first weeks of August. Fortunately, many states now institute sales tax holidays to dampen the blow of some of this spending.

"U.S. shoppers will spend more than $83 billion on back-to-school purchases."

According to the National Retail Federation, back-to-school season is second only to holiday shopping as a revenue driver for many retailers. The NRF expects U.S. consumers to spend more than $83 billion on school supplies and related purchases this year, with the average household spending $668 for K-12 students and $970 for those with college-age kids.

To help offset some of these costs, a number of states and municipalities have been instituting temporary sales tax holidays during select days, usually in August. Since these are aimed at shoppers with kids returning to school, the tax-free days or weekends may come with certain restrictions regarding which items are tax-exempt. It's also worth noting that some states don't charge any sales tax, while others may levy sales taxes at both the state and local level.

Details on tax-free days

The rules on these tax holidays vary depending on the state. Alabama, Mississippi and Tennessee, for example, hold their tax holidays during the last week of July, earlier than most others. The first weekend of August is the most popular time for states to hold tax-free days.

Many states also restrict tax exemption to certain categories. Clothing and shoes are common items that are available tax-free, along with books, backpacks, school supplies and computers. States also usually institute a price limit that can't be exceeded for each tax-free item. For example, Arkansas will only permit tax exemption for clothing items sold for $100 or less, but has no limit for school supplies. Interestingly, Louisiana's tax holiday offers a 2 percent sales tax discount on all "tangible personal property" sold for $2,500 or less.

Many retail stores will offer additional discounts or promotions during the tax-free weekend to attract shoppers. Take a look at your state and city rules on tax holidays and see if local retailers are offering any attractive deals.

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