Learn the basics and get 5 tips for taking advantage of this business-friendly policy.
This year, consumers in 17 states across the United States—Alabama, Arkansas, Connecticut, Florida, Iowa, Louisiana, Maryland, Mississippi, Missouri, New Mexico, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and Wisconsin—will get a price break a variety of goods when they shop during a sales tax holiday.
The details of these events vary by state. Some last just two or three days, while others run for a full week. Some are held in August or September for back-to-school shopping, and others are scheduled for early spring or summer for items such as air conditioners or hurricane preparedness supplies.
No matter the specifics, these brief respites from sales tax save consumers money, provide extra work hours for many employees, help boost local economies, and drive more shoppers into small businesses. NFIB supports sales tax holidays and would like to see all states adopt them.
NFIB Support of Sales Tax Holidays
In Massachusetts, for example, NFIB successfully fought to reinstate a permanent sales tax holiday this year after it had been suspended for two years because of revenue concerns. In his testimony before the Joint Committees on Revenue in January 2018, Chris Carlozzi, NFIB’s state director in Massachusetts, outlined several key benefits: “The sales tax holiday encourages shopping at Main Street businesses, with consumers supporting their local communities and bolstering local entrepreneurs while saving tax dollars and taking advantage of additional promotions. It has become an annual event that helps consumers to take advantage of countless local deals rather than taking their business across state lines to tax-free New Hampshire or to the internet.”
Positive Effects on Consumer Spending
A 2017 Federal Reserve study on how sales tax holidays affect consumer spending also found positive results. The study authors wrote, “To summarize, we find the timing of consumer spending is often extremely responsive to tax holidays. In particular, small reductions in after-tax prices were associated with large increases in the volume of purchases in a variety of spending categories, especially durable goods.”
How to Take Advantage of the Tax Holiday
Small businesses looking to capitalize on the extra foot traffic and consumer spending mindset should consider:
- Creating special store displays of merchandise that’s eligible for the tax break;
- Running a sale;
- Offering coupons;
- And making an event of it by offering a special in-store treat or promotion
Promoting any sales, special offers, or qualifying merchandise widely on your website and social media accounts.