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.
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.
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.
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 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.