Annual sales tax holiday gives back-to-school shoppers a break

From Staff Reports

Aug 16, 2007 - Texas shoppers get a break from state and local sales taxes on August 17, 18 and 19 – the state's annual tax holiday. Lay-away plans can be used again this year to take advantage of the sales tax holiday.

Shoppers can save about $8 for every $100 they spend.

State law providing for the sales tax holiday exempts most clothing and footwear priced under $100 from the sales and use tax. Customers will receive the break on individual items, regardless of the total amount they buy. For example, sales tax is not due if a customer buys six shirts each priced at $99.99. But full tax is due on a a single shirt sold for $100; the first $99.99 cannot be exempted.

Clothing and footwear used primarily for athletic activities or for protective wear are not eligible for the exemption. Customers buying golf cleats or football pads, for instance, must pay sales tax. Athletic wear that is also used for participation in other non-athletic activities, however, can qualify for tax exemption. For example, tennis shoes, baseball caps and jogging suits are worn during everyday activities and thus may be purchased tax-free during the holiday.

Also excluded from the sales tax holiday are accessories such as jewelry and watches; items that are carried rather than worn, including handbags, briefcases and wallets; clothing rentals, such as formal wear and costumes; and repairs and alterations.

Qualifying items are exempt from state sales taxes, but exemption from local sales tax is up to individual cities. 

While encouraging taxpayers to take advantage of the sales tax holiday, the state comptroller also had some words of caution for retailers.

A word of caution: If you sell items that do not qualify for the exemption, you may not advertise or promise that you will pay your customers' sales tax. Additionally, you are prohibited from advertising that you will not collect sales tax on items that do not qualify. You may advertise that tax is included in the sales price of the taxable items that you sell, however.

For information on how to report tax on these sales, please visit Reporting Sales Tax on Tax-Free Items or call us toll free at (800) 252-5555.

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