Back to School and Back to Sales Tax Holidays: A Quick History Lesson
Although it may still feel like summer, for many families, the arrival of August marks a shift in focus. Beach towels and pool noodles are slowly replaced with backpacks and three-ring binders. As parents, students, and teachers prepare for the start of the school year, the back-to-school shopping season kicks into high gear.
This annual spending ritual often includes everything from pencils and notebooks to sneakers and laptops. Given the rising cost of many school-related essentials, families are eager to find ways to cut costs. That’s where sales tax holidays come into play.
Sales tax holidays are short-term, state-designated periods during which certain items are exempt from state and, in some cases, local sales taxes. These temporary tax breaks are especially popular around back-to-school season, giving shoppers a chance to save on the items they’re already planning to purchase.
Since the new school year is just around the corner, it’s only fitting to do a quick history lesson on the origins and evolution of sales tax holidays.
A Brief History of Sales Tax Holidays
The concept of sales tax holidays dates back several decades. The very first examples occurred in the early 1980s, when Ohio and Michigan launched one-time tax breaks on automobile purchases to stimulate sales during economic downturns. These were isolated events, not recurring programs.
The modern model for sales tax holidays didn’t take off until New York initiated a clothing-focused sales tax holiday in 1997. The motivation was strategic. New York wanted to reduce cross-border shopping and encourage residents to buy locally instead of traveling to New Jersey, where there was no sales tax on clothing. This initiative sparked a nationwide trend.
By 2001, a total of 17 states adopted temporary sales tax suspensions to boost retail activity and offer consumer relief. Over time, the types of items included in these events expanded to disaster preparedness, energy-efficient appliances, hunting supplies, and even specific days designated for supporting small businesses.
According to The Council of State Governments, at least 27 states have implemented sales tax holidays since 1997. The concept has evolved from a clever economic experiment into a recurring policy tool embraced by lawmakers and shoppers alike.
What’s New in Recent Years
Fast forward to this year, and the tradition continues. As of July 2025, 14 states are offering sales tax holidays in the month of August. Louisiana and Nevada have planned holidays starting in September and October, respectively, and Florida also has an additional Hunting, Fishing, and Camping Sales Tax Holiday from September 8th through December 31st. While Alaska has no statewide sales tax, the municipality of Skagway offers a local sales tax holiday that ran from October 1, 2024, to March 31, 2025. This illustrates how local governments can get creative with tax relief strategies.
Florida has long been a leader in expanding and experimenting with sales tax holidays. Historically, these holidays were approved on a year-by-year basis as part of the state budget process. Over the last few years, Florida created new types of holidays for items that had never been included in a holiday and in most cases no state offers any type of exemption. Some of these were in response to the global pandemic in efforts to increase tourism in the state. In 2025, the state made a significant change.
With the passage of H.B. 7031 in June, Florida made its back-to-school sales tax holiday permanent every August. The legislation also introduced year-round exemptions, effective August 1, 2025, for specific goods that were previously only covered during temporary holidays. These include certain items from past disaster preparedness and Freedom Summer events, like batteries (AA, AAA, C, D, 6-volt, and 9-volt), fire extinguishers, portable generators, as well as sunscreen, insect repellent, and life jackets amongst other items. This shift from temporary to permanent relief is notable and could influence other states considering similar measures (Tax Information Publication No. 25A01-05, Florida Department of Revenue, July 1, 2025).
While most states structure sales tax holidays around general consumer items, Massachusetts, by contrast, removes it’s state tax on almost all tangible personal property under $2,500 for non-business use. This holiday, taking place from August 9 – 10 this year, is generally a blanket exemption, although it does have some exceptions, such as meals, motor vehicles and motorboats, as well as telecommunications services, gas, steam, electricity, tobacco and marijuana products, alcoholic beverages, and items whose single price is over $2,500. The holiday is now legally required each year, but exact dates aren’t announced until June 15, which introduces compliance and timing challenges for businesses trying to prepare for the change in logistics.
It’s not uncommon for sales tax holidays to lead to confusion when they are first introduced or changed. Ohio ran into this problem when House Bill 33 passed in 2024, which changed it’s annual sales tax holiday from three days to up to two weeks in addition to applying to all items of tangible personal property similar to Massachusetts. Running from August 1 through August 14, this is the first time the state has had a holiday this long. However, a problem arose with Ohio’s status as a Streamlined Sales Tax (SST) state, as it did not comply with Streamlined Sales and Use Tax Agreement (SSUTA) standards.
The issue stemmed from Ohio’s failure to provide timely notice to retailers and tax software providers about the expanded exemption period, as required under SSUTA guidelines. SST standards mandate that member states give at least 60 days’ advance notice before implementing tax rate or policy changes, including sales tax holidays. Because the announcement of the new two-week holiday came too late, Ohio was temporarily out of compliance with this rule. In addition, under the Streamlined Sales Tax Agreement, Sales Tax Holidays can only apply to a select list of items. The Ohio holiday applied more broadly. This triggered a review by the SST Governing Board which resulted in an amendment to the agreement and associated Taxability Matrix allowing a holiday on all goods. While the state ultimately retained its full membership status, it was required to address procedural shortcomings and improve its communication processes to align with SSUTA’s uniformity and notice requirements going forward (Section 322. Sales Tax Holidays, Streamlined Sales Tax Governing Board, SL25005A01/AM25002-01, May 9, 2025).
Nevada offers a uniquely limited version. It is available only to members of the Nevada National Guard and their qualifying relatives. Until 2023, qualified individuals had to apply 45 days in advance and present a letter of exemption to the retailer at the time of purchase. However, SB 50 changed the process in 2023. With the passage of this bill, eligible shoppers must:
- Apply for an exemption letter 45 days ahead of the holiday
- Pay sales tax at the time of purchase
- Submit the exemption letter, receipt, and refund request to the Nevada Department of Taxation
This new structure eases the burden on retailers but places more administrative responsibility on consumers, potentially discouraging participation, especially for minor purchases.
To see a full list of states, dates, and qualifying items, visit the Sales Tax Institute’s Sales Tax Holiday Chart.
The Positives: Why Sales Tax Holidays Are Popular
Sales tax holidays remain popular with both lawmakers and consumers, and for good reason. These events offer several tangible benefits.
- Relief for Shoppers: Even a modest tax break can make a significant difference for families purchasing large quantities of school supplies, clothing, and electronics. While the savings may not be massive on individual items, the overall effect during a large shopping trip can be meaningful.
- Boost for Retailers: Retailers typically see a spike in traffic during tax holiday weekends. Some businesses run additional promotions to coincide with the tax break, creating an event-like atmosphere that draws shoppers in.
- Political Appeal: Elected officials across the political spectrum often support sales tax holidays because they are easy to promote and widely appreciated. They offer visible benefits to constituents and are seen as a way to provide relief without the complexity of long-term tax reform.
- Public Sentiment: Most shoppers like the concept of a “holiday” from taxes. It feels like a break from the norm and can help encourage spending during periods that align with consumer needs, such as back-to-school or hurricane season.
The Pitfalls: What to Watch Out For
Despite their popularity, sales tax holidays are not without criticism. Several challenges and drawbacks have been identified by economists, tax professionals, and small business owners.
Research has shown that sales tax holidays often cause consumers to shift the timing of purchases rather than increase overall spending. Additionally, some retailers may raise prices during the holiday period, which can reduce or eliminate the intended savings.
The items that qualify for exemption are often tightly restricted by product type and price cap. For example, school supplies may be tax-free, but only if the total value of each item is under a certain dollar amount. These limits can confuse shoppers and result in unexpected charges at checkout.
Small businesses, in particular, can face headaches during sales tax holidays. They must update point-of-sale systems, retrain staff, and ensure that the correct items are exempt. In some cases, the rules for shipping, layaway, and returns vary by state, adding to the complexity. And in the post-Wayfair world, these local temporary exemptions with challenging rules add significant burden on small remote sellers. Not only must they know whether a holiday exists, but also what products qualify, the price threshold, how to handle the effective date with the time zone as well as the rules for refunds and returns.
An additional issue is determining whether localities also observe the holiday. In many states, sales tax holidays automatically apply to both state and local sales taxes; however, in states like Alabama, this is not always the case. Alabama has an opt-in system, where cities and counties do not automatically join in the holiday. Instead, these local jurisdictions must opt in through a resolution or ordinance. The inconsistencies this introduces, aka that one city could be participating while another still applies local sales tax, can make finding deals a challenge for those looking to take advantage of the discounts. This also imposes a much more significant burden on retailers – particularly remote sellers.
Some experts argue that sales tax holidays are a temporary fix that highlights broader problems. If states feel the need to suspend sales tax to boost spending or ease burdens, that may indicate that their overall tax system is not serving consumers well throughout the rest of the year.
School’s In and So Is Sales Tax Season
Whether you’re heading to the store for crayons and calculators or shopping online for a new laptop, sales tax holidays offer a chance to save during a time when every dollar matters.
They are not perfect. There are administrative hurdles, limited eligibility, and questions about their long-term effectiveness. But they continue to be a valued part of the back-to-school season for millions of families.
As you prepare for another academic year, consider adding a little tax literacy to your school supply list. Knowing which states are participating and what qualifies can help you stretch your budget without stretching your patience.
And if you want to plan your shopping around this year’s tax-free dates, don’t forget to check out the full 2025 Sales Tax Holiday Chart for the latest information. For more information on how different states define qualifying items, click here.