Sales Tax Holiday: Ready, set, shop

Written by Phil Cerroni

In 2012, Texas shoppers get a break from state and local sales taxes on Aug. 17, 18 and 19 – the state's annual tax holiday. As in previous years, the law exempts most clothing, footwear, school supplies and backpacks priced under $100 from sales and use taxes, which could save shoppers about $8 on every $100 they spend.

All sales of qualifying items made during the holiday period qualify for the exemption, including items sold over the Internet, television or by mail. Lay-away plans can be used to take advantage of the sales tax holiday.

Clothing and Footwear

Retailers are not required to collect state and local sales or use tax on most footwear and clothing that are sold for less than $100 during the holiday. The exemption applies to each eligible item that sells for less than $100, regardless of how many items are sold on the same invoice to a customer. For example, if a customer purchases two shirts for $80 each, then both items qualify for the exemption, even though the customer's total purchase price ($160) exceeds $99.99.

The exemption does not apply to the first $99.99 of an otherwise eligible item that sells for more than $99.99. For example, if a customer purchases a pair of pants that costs $110, then sales tax is due on the entire $110.

Backpacks

Backpacks priced under $100 sold for use by elementary and secondary students are exempt during the sales tax holiday. A backpack is a pack with straps one wears on the back. The exemption includes backpacks with wheels, provided they can also be worn on the back like a traditional backpack, and messenger bags.

The exemption does not include items that are reasonably defined as luggage, briefcases, athletic/duffle/gym bags, computer bags, purses or framed backpacks. Ten or fewer backpacks can be purchased tax-free at one time.

School Supplies

Texas families also get a sales tax break on most school supplies priced at less than $100 purchased for use by a student in an elementary or secondary school.

Source: Texas Comptroller of Public Accounts