Back-to-school savings galore!Published 8:32am Tuesday, July 30, 2013
Put your shopping shoes on….North Carolina’s final tax-free weekend begins Friday.
As is tradition during the first weekend in August, shoppers at retail outlets across North Carolina do not have to pay state sales tax on back-to-school items. Discounts on taxes are offered on everything from computers, to backpacks, to athletic apparel and equipment, to clothing.
This weekend will be the last tax holiday due to a major reform of the state’s tax code signed into law recently by Gov. Pat McCrory. The annual tax holiday for Energy Star-rated appliances, set for the fall months, is also being eliminated.
The final tax-free weekend officially begins at 12:01 a.m. Friday, Aug. 2 and ends at 11:59 p.m. Sunday, Aug. 4.
The three-day event is especially popular among North Carolina consumers because it provides a meaningful tax break for families as they make necessary purchases for school. According to a recent survey conducted by BIGinsight, staying on budget is still a concern for parents – 77 percent of families with school-aged children said the economy will impact their spending plans when shopping for necessary back-to-school items.
“North Carolina’s annual Sales Tax Holiday is important to the state’s consumers and business owners, the retail market and especially to the overall economy,” said Andy Ellen, president and general counsel of the North Carolina Retail Merchants’ Association. “It’s a popular tax break on back-to-school necessities for hard-working families during what continue to be difficult economic times. Shoppers enjoy the sales and savings, and retailers get a nice boost from it. It’s a win-win.”
While the tax holiday saves North Carolina consumers $14.7 million in sales tax, the NC Department of Revenue estimates that it costs the state the same amount in lost sales tax revenue.
However, a study conducted by The Washington Economics Group analyzed the revenues of the State of Florida in 2009 when there was no Sales Tax Holiday and in 2010 when Florida held a Sales Tax Holiday. Contrary to conventional wisdom the study determined that the Sales Tax Holiday resulted in higher tax collections because many consumers plowed the savings into the purchase of other necessary items subject to the tax. Taxable sales of items related to the 2010 tax holiday grew by $115 million.
“Without this weekend, the state’s business climate will suffer significantly as our residents will travel across state lines to shop tax-free weekends in surrounding states,” noted Ellen. “The retail business community always sees a significant increase in sales on Sales Tax Holiday weekend due to the savings customers receive on specials offered by retailers, particularly on big-ticket items such as computers. This weekend is a great shot in the arm for retailers – both independents and chains – who are the largest private employers in North Carolina.”
The Sales Tax Holiday also spurs employment and payroll taxes. On average, retailers added 8,300 payroll hours over the three-day event. NCRMA and state legislators initiated the Sales Tax Holiday to encourage North Carolina residents to buy from in-state retailers rather than in surrounding states or on-line during the second busiest shopping season of the year.
Additionally, the Sales Tax Holiday is the only three days a year that our local retailers are not at a competitive disadvantage with internet-only retailers who are not required to collect sales tax 365 days a year.
No sales tax will be charged during the three-day holiday on the following items:
Clothing with a sales price of $100 or less per item.
“Clothing” is defined as all human wearing apparel suitable for general use including coats, jackets, hats, hosiery, scarves, and shoes.
Sport or recreational equipment with a sales price of $50 or less. These items are designed for human use and worn in conjunction with an athletic or recreational activity that are not suitable for general use.
Computers, including tablet computers and netbooks, with a sales price of $3,500 or less per item. A “computer” is an electronic device that accepts information in digital or similar form and manipulates it for a result based on a sequence of instructions. For purposes of the exemption during the sales tax holiday, a computer includes a central processing unit, monitor, keyboard, mouse, and speakers since these items are deemed to be necessary in the operation of the computer. The separate sale of a monitor, keyboard, mouse, or speakers is subject to the applicable tax when the item is not sold in conjunction with a central processing unit. An eReader with enhanced computing functions, such as internet access, e-mail, and the ability to download and run applications, is a computer for purposes of the sales tax holiday period. Basic eReaders are not computers and are subject to the State and applicable local sales and use taxes during the holiday.
Computer supplies with a sales price $250 or less per item. A “computer supply” is an item commonly used by a student in a course of study in which a computer is used. Those supplies include computer storage media, including diskettes and compact disks, handheld electronic schedulers, except devices that are cellular phones, personal digital assistants, except devices that are cellular phones, computer printers, and printer supplies for computers, including printer paper and printer ink.
School supplies with a sales price of $100 or less per item.
A “school supply” is an item commonly used by a student in a course of study; the term includes school art supplies and school instructional materials. Those items include the basics (lunch boxes, crayons, pens, pencils, paper, notebooks, binders, erasers, glue, paste, index cards, legal pads, rulers, scissors, paint, paintbrushes, drawing pads and calculators).
School instructional materials with a sales price of $300 or less, to include reference books, reference maps and globes, textbooks, and workbooks.
For a full list of items you can buy free of taxes, visit the N.C. Department of Revenue’s website.