Frugal Friday: Sales Tax Holidays - Jean Chatzky - Making money make sense
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Frugal Friday: Sales Tax Holidays

iStock_000017007129SmallWe’ve already established that back-to-school sales are in full swing. But have you done your shopping yet? Can I urge you to wait a bit?

Not only because the sales are bound to get better — I noted that in the piece linked above, and dealnews recently published in-depth analysis about laptops, clothing, and dorm furniture — but because in many states, sales tax holidays are on their way.

What does that mean, exactly? Savings for you, first of all. About 17 states waive sales tax for a couple days during the back to school season. But it also means you should carefully plan your shopping, because there is a bit of fine print — most states place restrictions on what, exactly, can be purchased tax-free, and a limit on the price of the items that fall under the tax-free umbrella. This link has a rundown of participating states, but in general, most that participate will offer a tax break on clothing, shoes, and often computers that are priced under a set limit. For instance:

Is the savings huge? Well, no. Oklahoma’s state sales tax is 4.5%, not including local taxes.  That means residents will save $4.50 on a $100 clothing purchase. If your state’s tax rate is higher, you’ll save more. Tennessee, for example, has a state sales tax of 7%, which could mean a savings of up to $105 on a computer purchase.

Bottom line: It makes sense to buy when you can skip sales tax, if your state is offering the opportunity. But it also makes sense to double up with a promotion or sale — and luckily, many stores will run them in conjunction with the sales tax holiday. So keep an eye peeled for those deals in your area, and you could walk away with big savings.

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