There’s no dispute that the cost of consumer goods is soaring. The U.S. inflation rate rose 9.1 percent for the 12 months ending June 2022. With rising prices across many sectors, the prospect of shopping for your child’s school items can be daunting. What was once economical may now be expensive.
To take the edge off, look for your state’s tax-free shopping period and make your purchases then. You won’t be charged sales tax on certain items, up to a fixed amount. A couple of these special days may still be coming up for you in early August, which will be perfect timing to fix the kids up with many of the things they need for school, at a discount. To increase your savings, charge it to a credit card that offers rewards.
Who pays sales tax
As a consumer, you typically pay a variety of taxes throughout the year and for various events, including taxes on the money you earn as income on your home as property tax. Another common one is sales tax, which you are charged when you buy goods and services. The money generated for sales tax goes into the state’s coffers to pay for such things as infrastructure, fire and police departments, and public schools.
There are only five states in the country that don’t add this tax to a purchase: Alaska, Delaware, Montana, New Hampshire and Oregon. If you live in one of these states you enjoy a sales tax free holiday all year round. If you don’t, however, you’ll pay it every time you buy something, whether at the cash register or when you hit the “buy” button online.
Depending on the state you live in, the sales tax rate can be low or high. A 2022 roundup of rates conducted by the Tax Foundation found that Colorado has the lowest state sales tax rate, at 2.9 percent, while California has the highest rate at 7.25 percent. The nationwide average is 5.09 percent.
When you can get a sales tax break
Even if you reside in a state that does charge sales tax on purchases, you can avoid paying the tax during certain times of the year. Many states give residents who want to purchase items for education (and emergencies) a break on sales tax on these special weekends, making the things you need to buy just a little more affordable.
Check the Federation of Tax Administrators list of 2022 State Sales Tax Holidays to see if your state is on it, when the tax-free dates are for back-to-school items and a general breakdown of what you can get without taxes being added. A few examples for 2022 include:
— Connecticut: Aug. 21-27, clothing and footwear up to $100