Tax Holidays Coming to Several States Despite Uncertainty

With August now just days away, the 2020 back-to-schools shopping season is also on its way — and it looks a lot different than it did in 2019. Nevertheless, despite a lack of normalcy across the country, several states are still scheduled to offer tax holidays in the coming weeks. But will consumers and businesses be able to benefit this time around?

According to WalletHub, there are currently 16 states that offer some type of tax holidays corresponding to back-to-school time. Additionally, five states (Alaska, Delaware, Montana, New Hampshire, and Oregon) are free from sales taxes year round. In the states that do have tax holidays, shoppers can save between 4% and 7% as a result.

While back-to-school tax holidays are an annual event, this year’s events come during an uncertain time. For one, in many parts of the country, it’s not yet clear whether or not students will be returning for in-person classes in the fall. To that point, while distance learning might lead to lower demand for some supplies, it could boost sales of electronics such as laptops and tablets that some states include in their qualifying tax exceptions.

Another conundrum is that, although major retailers have been able to remain open, small businesses that would traditionally benefit from these holidays may not be as lucky. As Urban-Brookings Tax Policy Center senior fellow Howard Gleckman told CNBC, “The rhetoric is that one of the beneficiaries of sales tax holidays are these local Main Street businesses. The problem is that in a lot of places, those businesses are closed. Who are you helping? Walmart, Target and other big chains that have the resources to stay open.”

Of course, although the potential of missing this round of tax holidays may be a disappointment for some businesses, the timing could be especially crucial for parents. With U.S. unemployment still in the double digits and no official word on when another round of stimulus checks will be reaching taxpayers’ mailboxes, those who do need supplies for their children will surely rejoice in any savings they can find.

In a recent WalletHub survey, 71% of respondents said that the current pandemic had changed their attitude toward back-to-school shopping, with 38% planning to spend less than last year and 6% not intending to shop at all. Meanwhile, for those who do need to stock up on supplies, tax holidays can be a welcome reprieve. So despite this year’s back-to-school season bringing unprecedented challenges, hopefully parents and small businesses in the 16 participating states will still be able to see some benefits as they have in years past.