Got savings? Sales tax holiday this weekend

Back-to-school shoppers won’t have to pay local or statewide sales tax on certain items this weekend, thanks to a bill signed into law last year.

Clothing priced under $75, school supplies under $20 and school instructional material under $20 are all exempt from sales tax starting on Friday at 12:01 a.m. and going until Sunday until midnight.

“The sales tax holiday can’t come at a better time for families preparing their kids to go back to school in August,” said State Senator Kevin Bacon, R-Minerva, in a news release.

Bacon proposed the legislation, Senate Bill 243, in 2013 and it was signed into law last December.

“The opportunity to save money on essential clothing and school items will reduce the financial strain on consumers and boost sales for local businesses,” he said.

In 2012, the average family with K-12 children was expected to spend $688.82 on back-to-school supplies and clothing, according to a study by the National Retail Federation.

That means the average household in Ohio could save up to $38 this weekend as the state waives its 5.75 percent sales tax on certain items, according to a 2013 study by the University of Cincinnati’s Economics Center. In Hamilton County the savings could be even higher, as the county sales tax is 7 percent.

Lora Miller, director of governmental affairs and public relations at the Ohio Council of Retail Merchants, a trade organization that has lobbied for such legislation for over 15 years, said the holiday will be very popular with shoppers.

“Anytime consumers can save any amount of money, they are interested in it,” she said. “Plus, they like feeling like they’re going over the government.”

Everybody can save

Shoppers don’t have to prove that they are purchasing items for a student or that they’re from Ohio to take advantage of the sales-tax holiday. Only items used for trade or business are not included.

Additionally, multiple items can be purchased in a single tax-exempt transaction. For example, if shoppers buy two shirts and two pairs of pants each priced at $50, or $200 total, all of the transaction would be exempt from sales tax.

Most types of clothing and shoes are included, but accessories, jewelry and cleated or spiked athletic shoes are not. School instructional material like reference books and textbooks are included, provided they are priced under $20.

If retailers offer discounts reducing the price of an item to a qualifying price, under $20 or $75, those items still qualify for the exemption.

Items purchased on the Internet are also exempt, provided the consumer orders and pays for the item and the retailer accepts the order from Friday to Sunday.

The state is expected to see a $14 million decrease in sales tax revenue in fiscal year 2016 as a result of the holiday, according to a memo by the Ohio Legislative Service Commission. Sales tax revenue is typically distributed to the General Revenue Fund, the Local Government Fund and the Public Library Fund.

But the state is expected to see increased revenue in other ways.

“We don’t rule out the possibility that there could be a small loss (for the state),” said Michael Jones, an assistant professor of economics at UC’s Linder College of Business. “But even if there is a slight loss, that money is still in consumers’ pockets.”

The study by UC’s Economics Center found that Ohio households will save $78 million during the three-day weekend. Families will spend that money elsewhere, experts say.

“The concern from the government is that they will end up losing sales tax money,” Jones said. “That’s not the case. Consumers use the savings they have on other items they may not buy.”

Miller said shoppers, especially those from out of state, will spend their money on other taxable items like gasoline and eating out while traveling.

Total retail sales volume is expected to increase by 4.8 percent during the month.

“This will benefit Ohio,” she said.

There are currently 18 states nationwide that offer a sales tax holiday. Most of those states offer the exemption on back-to-school items, while a few states in the South offer a sales-tax exemption for emergency preparedness items.

Once one state enacts a sales-tax holiday, other states often follow suit, Jones said.

“You want to discourage your residents from crossing the border and shopping there,” he said.

Jones and Miller said they wouldn’t be surprised if states bordering Ohio will enact a sales-tax holiday in coming years. Currently no states bordering Ohio provide a sales tax holiday, but Miller said officials in Michigan have been contemplating a similar holiday.

Kentucky lawmakers have considered creating tax-free holidays, and Gov. Steve Beshear has supported one for back-to-school shopping, according to Enquirer archives.

“I wouldn’t be surprised,” said Miller, “if we see legislation in other bordering states after our holiday shows that it went so well.”