Carnival of Personal Finance #111
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Attention tax-free shoppers

Classrooms across the country will reopen their doors in a few weeks. That noise you hear is not cheering parents.

OK, it is.

Sales_tax_holiday_2 But that other noise is 15 states (14 officially; Massachusetts is still working on its holiday, but it is expected to be finalized this week.) and the District of Columbia dusting off their sales tax-free holiday materials.

Almost all of these shopping tax sops are advertised as ways for parents to save on back-to-school supplies they must buy for the kiddies. The first one of the season starts Thursday, Aug. 2, in Georgia, followed by most others kicking off at 12:00 a.m. on Friday, Aug. 3. A handful are later in the month.

The majority of holidays last through a weekend. A couple are shorter; a few are longer. And a few will have additional events later this year.

In some places, the local sales taxes also are abated for the holiday period, but not always, meaning the tax-free holiday might not be totally tax free.

What's tax free and what's not: You also have to pay attention to the items that are exempt from state (and may local) sales taxes during the holidays. Most let shoppers avoid taxes on clothing, footwear and school supplies. A couple offer tax savings on computers.

But some of the tax-exempt lists are as confusing as they are amusing. In Iowa, for example, a belt with a buckle on it is tax-free. But buy a belt sans buckle, and you'll owe tax on the item. I guess up in the Hawkeye State they don't have many winning rodeo cowboys who supply their own championship buckles.

And in Florida, which makes a pretty state sales tax penny on theme park souvenirs, the levies will continue to be collected on otherwise tax-exempt items (e.g., books, clothing or school supplies) purchased within any of the state's many such entertainment complexes.

Below is the list of the states holding (or planning) sales tax holidays this year and general info on each event. The links will take you to the state's official Web page with all the tax-free details.

Alabama, Aug. 3-5: Clothing costing less than $100; school supplies up to $50 each; books that cost up to $30; computers and software costing up to $750.

Connecticut, Aug. 19-25: Clothing costing less than $300.

Florida, Aug. 4-13: clothing or books that sell for $50 or less; other school supplies priced at $10 or less. This is the state's second of the year. A holiday in June exempted many hurricane supplies from taxes.

Georgia, Aug. 2-5: Clothing and footwear selling for $100 or less; computers selling for $1,500 or less; general school supplies with a sales price of $20 or less per item. The Peach State will hold a second sales-tax holiday Oct. 4-7 for certain energy efficient products.

Iowa, Aug. 3-4: Clothing and footwear that's priced at $100 or less. Note that the holiday ends at midnight on Saturday; no tax-free Sunday shopping here.

Louisiana, Aug. 3-4: New this year, the Pelican State is offering a very generous tax holiday -- no sales tax on most items purchased for personal use that don't exceed $2,500. But it's also for only two days.

Massachusetts, Aug. 11-12: This link is to the state's main revenue page and the date is tentative. Once the state legislature gets done with this bill, the Bay State's holiday will be identical to last year's holiday -- items costing $2,500 or less are tax-free -- whose enactment also was slow. The House passed the holiday bill last week. The Senate is scheduled to take it up today. The governor says he will sign it.

UPDATE: On Aug. 2, the 2007 Massachusetts tax holiday became official. More details in this post.

Missouri, Aug. 3-5: Clothing and footwear of $100 or less; school supplies priced at $50 or less; personal computers of $3,500 or less; computer peripheral equipment also priced at $3,500 or less; software costing $350 or less.

New Mexico, Aug. 3-5: Clothing costing less than $100; computers less than $1,000; peripherals less than $500.

North Carolina,  Aug. 3-5: Clothing, footwear and school supplies of $100 or less per item; sports and recreation equipment of $50 or less per item; computers of $3,500 or less per item; and computer supplies of $250 or less.

Oklahoma, Aug. 3-5: Another first-time holiday state. Clothing and footwear costing $100 or less.

South Carolina, Aug. 3-5: A wide-ranging holiday on clothing, clothing accessories, footwear, school supplies, computers, printers and printer supplies, computer software, certain bath and bed linen products. No price limit.

Tennessee, Aug. 3-5: Clothing priced at $100 or less per item; school supplies selling for $100 or less per item; personal computers priced at $1,500 or less.

Texas, Aug. 17-19: Most clothing and footwear costing less than $100. The holiday is later than in 2006 because many Lone Star State schools are starting classes later this year.

Virginia, Aug. 3-5: Clothing and shoes priced at $100 or less per item; school supplies costing $20 or less per item.

Washington, D.C., Aug. 4-12: Each school item, pair of shoes, article of clothing or accessory that costs $100 or less. Shoppers in the nation's capital also will be able to save on holiday sales taxes from Nov. 23 through Dec. 2.

If your state has a holiday, enjoy it wisely. Don't overbuy just because you're getting a bit of a tax break. Despite what advertisers say, you can't save by spending.

You can read more about the assorted tax holidays, including some thoughts from folks who say they are bad tax policy, in this Bankrate story -- This is why I'm a tad slow getting this info up here on the blog. I had to finish this for-pay story and accompanying holiday listing first. -- and in this commentary from the Tax Foundation.

You also can check out my fellow tax bloggers who've posted their thoughts on the tax holidays: About: Tax Planning, Taxgirl, Raising4Boys and Taxprof.


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