Category: Sales Tax Holidays

Sales tax holidays give shoppers a chance to save when they buy certain products or from certain retailers. Many states offer tax holidays at specific times of year to help give businesses and consumers a boost. While November is typically a big month for sales and shopping, it’s not a big month for sales tax holidays. Just one state, New Mexico, has a tax holiday in November.

What’s a Sales Tax Holiday?

On sales tax holidays, retailers can’t collect sales tax when customers purchase qualifying items. Examples of popular sales tax holidays include back-to-school, disaster prep, and energy-saving appliances. 

Sales tax holidays can make life a little bit trickier for retailers, as they need to know what items are included in the holiday and whether it extends to local sales tax or is just for state taxes. 

New Mexico Sales Tax Holiday

Small Business Saturday comes the day after Black Friday. It’s meant to be a day for celebrating and supporting mom-and-pop businesses. Retailers often offer sales and specials on Small Business Saturday to encourage people to shop.

New Mexico sweetens the deal by turning Small Business Saturday into a sales tax holiday. Retailers who qualify can deduct the gross receipts tax (New Mexico’s version of sales tax) from sales of qualifying personal property, which must be priced under $500.

True to its name, the Small Business Saturday tax holiday is open to small businesses only. To qualify, a company must have fewer than 10 employees throughout the year. It also must have its primary business in New Mexico.  

This year’s Small Business Saturday tax holiday takes place on November 25. 

What Does It Mean for You?

If your company is based in New Mexico and has less than 10 employees, then you may need to deduct sales tax from any purchases made on November 25. This isn’t a place where you need to worry about having physical or economic nexus—the holiday is only open to companies that have New Mexico as their primary business location.  

To claim the sales tax holiday deduction, you need to include the appropriate deduction code when you file your sales tax return in New Mexico. 

Not sure what any of that means? TaxCloud can help. Our sales tax filing services let you focus on your business while reducing your costs. Talk to us today to learn more.

During a sales tax holiday, items that normally have sales tax are tax-free. States have the option of choosing when to hold a sales tax holiday and what items to exempt from the tax. Often, sales tax holidays coincide with seasonal events, such as computers, clothing, and school supplies being tax-free around back-to-school time. 

October isn’t a particularly busy month for sales tax holidays, but a handful are taking place across the country.

Alaska

While Alaska has no state-wide sales tax, many of its municipalities do. In the past, the municipality of Skagway has passed resolutions declaring a sales tax holiday starting in October and stretching through March of the next year. During that time, all sales are exempt from the municipality’s usual 5% tax rate.

Nevada

Sales tax holidays are usually for specific products, such as clothing, food, or computers. But in some cases, they can be for specific people. 

From October 27 through October 29, 2023, members of the Nevada National Guard and their families can claim a sales tax exemption. Dubbed “Nevada Day,” the annual sales tax holiday is usually celebrated on the last day of October but was moved to Friday, October 27 this year. 

Nevada Day works a bit differently from other sales tax holidays. Instead of retailers not charging or collecting sales tax during the event, it’s up to members of the Nevada National Guard to claim the exemption and request a refund from the Department of Taxation.  

Tennessee

October is the final month of a three-month sales tax holiday in Tennessee. Starting in August, the state has exempted food and food ingredients from sales tax. The sales tax holiday is expected to help people in Tennessee save more than $270 million in sales tax. 

Certain types of food, such as candy and prepared foods, aren’t included in the sales tax holiday. Alcoholic beverages, tobacco products, and dietary supplements are not part of the tax holiday. 

Virginia

Virginia usually holds a back-to-school, energy-efficiency, and emergency preparedness sales tax holiday at the end of August. During the three-in-one holiday, the following are all exempt from sales tax:

• School supplies (under $20 per item)
• School clothes and shoes (under $100 per item) 
• Gas-powered chainsaws (under $350 per chainsaw)
• Portable generators (under $1,000)
• Chainsaw accessories (under $60 each)
• Qualifying EnergyStar or WaterSense products (under $2,500 each)

 

This year’s triple-whammy sales tax holiday got pushed to October as the state was still figuring out its budget in August. The holiday starts on Friday, October 20, and ends at the stroke of midnight on Sunday, October 22.

Sales tax holidays are good news for shoppers, but what do they mean for you as the seller? If you’ve been keeping your taxability information codes (TICs) up to date, not much. Your TICs should automatically update to reflect any applicable sales tax holidays, whether in October or another time of the year. 

Want to make sure you’ve got it right? We can help. Get in touch, and we’ll show you how TICs apply the correct sales tax to an order, sales tax holiday or not.