For a few days during July or August, 17 states will temporarily suspend sales tax in the hopes of spurring economic growth. At other times of the year, tax-free shopping days focus on items like hurricane preparedness supplies, hunting supplies or Energy Star products, but late-summer sales tax holidays offer savings on clothing and school supplies in anticipation of kids heading back to school.
Back-to-school shopping is big business for retailers. In fact, the National Retail Foundation reports that families with children in grades K-12 spent nearly $690 on school-related items last year.
Even if you aren't a parent, these tax-free days are still worth checking out, especially if you live in a state that normally has high sales tax. Julia Scott, founder of BargainBabe.com, says she stocks up on basics like paper and pens for her home office during this time of year. "Back-to-school sale season is not just for parents and families," she explains. "The deals on office supplies are almost unbeatable."
Some stores offer additional discounts or promotions during back-to-school season that can save you more on top of tax savings. Here's a look at strategies for getting the most bang for your buck.
1. Set a budget. Back-to-school items can add up quickly, so decide what you need and how much you'll spend before you leave the house. "It's easy to get caught up in the excitement [of a sale] and spend way more than you would anyway," Scott cautions. "Whether or not you're shopping during one of these tax break holidays, always go in with a list so you don't get carried away."
Studies show that paying with cash can help ensure you don't overspend because dollar bills leaving your wallet make more of a psychological impact than swiping plastic. But if you trust yourself to exercise restraint and promptly pay off the balance, rewards credit cards can help you reap additional savings. "Oftentimes, cash-back or rewards credit cards offer bonus categories this time of year, so you'll earn extra points for shopping at an office supply store," says consumer and money-saving expert Andrea Woroch. Another strategy is to cash in credit card points for gift cards to a clothing or office supply store, and pay with those in lieu of your own money.
2. Know your state's parameters. Tax-free items and limits vary by state, so if avoiding sales tax is part of your shopping strategy, check your state's rules. For instance, in Alabama, only certain localities are participating in the tax holiday and certain items such as magazines, non-educational video games, furniture and sunglasses are still taxable. On the other hand, clothing that costs less than $100 per item, computers that cost less than $750, school supplies under $50 and books under $30 are not taxed in participating localities during the three-day holiday. If you're unsure about what's taxable and what's not, review your state's website or ask the retailer.
3. Compare prices. Check weekly sales flyers online before you drive to the store so you'll know what's on sale. Scott also recommends following your favorite brands' Facebook or Twitter pages or signing up for their email lists to stay on top of current promotions.
Price-comparison smartphone apps like RedLaser or ShopSavvy let you scan an item's barcode or type in an item name to find out what stores or online retailers carry the item and at what price. Driving around to four or five different stores isn't the most time- or gas-efficient approach, so if a retailer has a price-matching policy and carries the items you need, you could do the bulk of your shopping in one place. Big-box retailers might match the price offered down the street, but they don't necessarily match prices available from a smaller online retailer, Woroch adds.
4. Check for coupons. Some stores offer coupons you can print out online, but a growing number of brands offer mobile coupons that don't require printing. "Get in the habit of checking your phone before you walk in the door of a store," Woroch says. Can't remember to do that? The Shopular smartphone app automatically notifies you of nearby deals while you're out shopping in a store.
But if you're already at the checkout and don't have a coupon, Woroch recommends asking the cashier if there are any applicable coupons. "I recently did that when buying shoes, and the clerk was able to give 15 percent off," she says. "It never hurts to ask."
5. Watch for price drops. Retailers' policies on price adjustments vary, but some will refund you the difference if the price on an item you've purchased drops within seven, 14 or 30 days. To help keep track of pricing changes, Woroch recommends adding items you've bought to Hukkster.com, which will email or text you when the item goes on sale.
See states offering back-to-school tax holidays below: