August marks the beginning of school for Texas children; and many parents plan to “cash in” on the savings offered through tax-free clothes and school supplies needed for the next school year.
“From Aug. 20–22, shoppers will pay no state or local sales tax on many school supplies, school backpacks and most children’s and adults’ clothing and shoes priced at less than $100,” Texas Comptroller Susan Combs said. “As our economy continues to recover, this tax break will help families get more “bang for their back-to-school bucks.”
This year, Combs predicts shoppers will save $59.3 million in state and local sales taxes during the Sales Tax Holiday, which takes place each year on the third Friday, Saturday and Sunday in August.
The Sales Tax Holiday has been an annual event since 1999 and falls on the weekend of August 20-22. To take advantage of the sales tax holiday, lay-away plans can be used again this year.
The law exempts most clothing and footwear priced under $100 from sales and use taxes, which could save shoppers about $8 on every $100 they spend. There are a few stipulations to what makes an item qualified to be tax free. Rules such as backpacks being defined as “a pack with straps one wears on the back” make some rolling backpacks ineligible classifying these as luggage which is not on the exempt list. Other items considered as luggage and ineligible are briefcases, athletic/duffle/gym bags, computer bags, purses or framed backpacks.
Below are lists of school supplies and clothing that are and are not approved for tax exemption:
School Supplies
An expanded list of items qualifying for exemption from taxes was passed by the Texas Legislature through HB 1801 (2009). Effective this year, in addition to clothes, footwear and some backpacks, 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.
The following is an all-inclusive list of qualifying school supplies (if priced less than $100):
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No exemption certificate is required – with one exception. If the purchaser is buying the supplies 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.
List of Clothing, Footwear and Backpacks, and Their Exemption Status:
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TAX-FREE |
TAXED |
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For retailers, a word of caution is offered: 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.
