Clothing, school supplies, and computers and related accessories are on the list of tax-exempt items during the Back-to-School Sales Tax Holiday, Aug. 1-3.
Pinellas County school students return to class Monday, Aug. 18, and the state wants to help reduce the burden on households budgeting for the necessities of learning.
Florida’s 2014 Back-to-School Sales Tax Holiday begins at 12:01 a.m. Friday, Aug. 1, and continues through 11:59 p.m. Sunday, Aug. 3. During the three-day period, purchases of certain school supplies, clothing, and computers and computer-related accessories will be exempt from sales tax.
The state’s first sales tax holiday occurred in 1998 and it ran for seven days. For the first few years, the tax holiday applied only to clothing and footwear. In 2001, lawmakers added school supplies to the tax-exempt list. In 2013, legislators added computers and related accessories valued at $750 or less for personal or home use.
Computers are still on the list for 2014, but this year, the tax-exempt status will apply to the first $750 of the sales price, allowing shoppers to buy costlier equipment and still have some tax savings.
Another change is an increase in the exemption for clothing items from $75 to $100 or less per item. The amount for school supplies, $15 or less per item, remains the same.
Tax-exempt clothing includes wallets or bags, and handbags, backpacks, fanny packs and diaper bags, but excludes briefcases, suitcases and other garment bags, having a sales price of $100 or less. Clothing is defined as any article of wearing apparel intended to be worn on or about the human body, excluding watches, watchbands, jewelry, umbrellas and handkerchiefs; and all footwear, excluding skis, swim fins, roller blades and skates.
School supplies means pens, pencils, erasers, crayons, notebooks, notebook filler paper, legal pads, binders, lunch boxes, construction paper, markers, folders, poster board, composition books, poster paper, scissors, cellophane tape, glue or paste, rulers, computer disks, protractors, compasses, and calculators. Supplies that are not exempt include books, computer paper, correction tape, fluid or pens, making tape, printer paper, staplers and staples.
Personal Computers include electronic book readers, laptops, desktops, handhelds, tablets and tower computers. The term does not include cellular telephones, video game consoles, digital media receivers, or devices that are not primarily designed to process data.
Personal computer-related accessories includes keyboards, mice, personal digital assistants, monitors, peripheral devices modems, routers, and non-recreational software, regardless of whether the accessories are used with a personal computer base unit.
The term does not include furniture or systems, devices, software, or peripherals designed or intended primarily for recreational use. Tax-exempt monitors do not include devices that have a television tuner. Cameras, copy machines, fax machines, smart telephones, surge protectors also will be subject to tax.
Eligible items purchased at a theme park or entertainment complex, public lodging establishment or an airport are not exempt from sales tax.
According to the National Retail Federation, the back-to-school shopping season is the second biggest next to the winter holidays. Retailers are eager to capture a piece of the estimated $72 billion that will be spent during the season. Many are offering early sales and some are bundling in gift cards as an incentive.
The potential for an influx in revenue is the primary reason Florida lawmakers brought the tax holiday back after discontinuing it in 2008 and 2009. A study by the Washington Economics Group showed that the state lost millions of dollars in tax revenue through the absence of a 2009 back-to-school sales tax holiday.
A follow-up study released by WEG in 2011 confirmed the findings, showing that the 2010 back-to-school sales tax holiday brought in a $7 million net increase in tax revenue over what would have been collected without any tax incentive. According to the Florida Department of Revenue, the cost of the 2013 tax holiday was about $28.3 million.
In all, Florida residents are expected to save at least $40 million over the three-day holiday, according to officials with the Florida Retail Federation. Combined spending for back to school and college is expected to reach about $5 billion in Florida, and tax-exempt sales will account for an estimated $600 million of that spending.
According to the National Retail Federation’s 2014 Back-to-School Survey conducted by Prosper Insights & Analytics, the average family with children in grades K-12 will spend $669 on apparel, shoes, supplies and electronics, up 5 percent from $634 last year.
“Retailers are reporting a strong trend of sales growth of between 4 and 5 percent statewide, and we expect spending to remain strong through the crucial month of August,” said FRF President and CEO Rick McAllister. “Florida’s economy is humming along at a nice pace, and we are very pleased to see consumer spending warming up. Consumer spending is at least 70 percent of the economy, so when retailers are doing well it usually means everyone else is doing well.”
Know the rules
Articles sold as a set cannot be priced separately so individual items qualify for a tax-exemption. If a taxable item is bundled in a set, the entire purchase will be subject to tax.
Items returned after the holiday and exchanged for the same item will not be subject to tax; however, items exchanged for a different item would be taxed. Items purchased with a rain check during the holiday, regardless of when the rain check was issued, will be tax-exempt if they qualify. Items purchased with a rain check issued during the tax holiday will be subject to tax if it purchased after the holiday ends.
Eligible items placed on layaway will not be taxed if a shopper takes delivery during the holiday. Items placed on layaway during the holiday and paid off later also are not subject to tax.
Online purchases also are exempt from sales tax if the item is accepted by the company for immediate delivery, even if the delivery is after the holiday. If shipping and handling are part of the sale price, and multiple items are included on an invoice, the shipping and handling charges must be “fairly assigned” to each item to determine if the item still qualifies for the tax exemption.
Service warranties on items eligible for a tax exemption also will be free of tax.