Sales Tax Holiday this weekend

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This year’s Sales Tax Holiday is coming up, just in time to get prepared for the school year. From Aug. 11-13, shoppers can save $8 on each $100 spent when shopping for tax exempt items.

As in previous years, the law exempts sales and use taxes on most clothing, footwear, school supplies and backpacks priced less than $100.

According to the Texas Comptroller's office all sales of qualifying items made during the holiday period qualify for the exemption. This includes items sold online, by telephone or by mail. Shoppers may even use layaway plans to take advantage of the Sales Tax Holiday.

When shopping for savings it is important to read the “fine print” to know important information about this tax-saving event.

Clothing and Footwear

Retailers are not required to collect state and local sales or use tax on most footwear and clothing sold for less than $100 during the holiday. Exemption certificates are not required. 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 you purchase two shirts for $80 each, 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.

The exemption also does not apply to sales of special clothing or footwear that the manufacturer primarily designed for athletic activity or protective use and that is not normally worn except when used for the athletic activity or protective use for which the manufacturer designed the article. For example, golf cleats and football pads are primarily designed for athletic activity or protective use and are not normally worn except for those purposes; they do not qualify for the exemption. Tennis shoes, jogging suits and swimsuits, however, are commonly worn for purposes other than athletic activity and thus qualify for the exemption.

Tax exemption does not extend to rental of clothing or footwear; nor does it apply to alteration (including embroidery) or cleaning services performed on clothes and shoes. Additionally, tax is due on sales of accessories, including jewelry, handbags, purses, briefcases, luggage, umbrellas, wallets, watches and similar items.

Backpacks

Backpacks priced less than $100 sold for use by elementary and secondary students are exempt during the sales tax holiday. 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 without providing an exemption certificate to the seller.

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.

Purchases bought with a business account

Persons buying qualifying school supplies during the holiday are not required to provide an exemption certificate – with one exception. If the purchaser is buying the items under a business account, the retailer must obtain an exemption certificate from the purchaser certifying that the items are purchased for use by an elementary or secondary school student. "Under a business account" means the purchaser is using a business credit card or business check rather than a personal credit card or personal check; being billed under a business account maintained at the retailer; or is using a business membership at a retailer that is membership based.

Layaways

A sale of a qualifying item under a layaway plan qualifies for exemption if the customer places the qualifying merchandise on layaway during the holiday or makes the final payment during the holiday.

Rainchecks

Eligible items that customers purchase during the holiday with use of a rain check qualify for the exemption regardless of when the rain check was issued. However, issuance of a rain check by a seller during the holiday period will not qualify an eligible item for the exemption if the item is actually purchased after the holiday is over even if the rain check is presented at the time of purchase.

For a full list of exempt items go to https://comptroller.texas.gov/taxes/publications/98-490/clothing-footwear.php

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