State governments tighten their grip on sales tax holidays
July, 28th 2016
Millions of shoppers will have a chance to stick it to the government over the next few weeks, as 17 states and Puerto Rico prepare for their respective sales tax holidays. Yet in several places across the country, these events will be noticeably more muted this year — if they're held at all.
After initiating exemptions for its residents in 2004, Massachusetts will sit out its annual sales tax holiday for the first time since 2009. Government leaders cited budgetary constraints as the reason for its decision.
Florida will once again offer exemptions on clothing and school supplies, but it will be harder for shoppers to capitalize on these deals. The Sunshine State is trimming its event from 10 days to three, and eliminating computers as a qualifying purchase.
And in Louisiana, which earlier this year passed some "fairly substantial" changes to its sales tax rules, the government will offer a reduced tax rate of 3 percent, said Charles Maniace, director of tax research at Sovos Compliance. That compares with its typical 5 percent rate.
"This is the first time that I can recall a sales tax holiday with a limitation on the rate," Maniace said. States typically add caveats to the items that are exempt — for example, limiting them to school supplies or clothing — or put in place a certain spending limit, to help plug the hole in lost revenue.