States Expand Sales-Tax Holidays to Soften Inflation’s Blow
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What is the main topic discussed in this episode?
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What are state sales-tax holidays and how do they work?
Here's your money briefing for Wednesday, August 17th. I'm Daniela Cheslow for The Wall Street Journal, filling in for J.R. Whelan. Inflation's at a four-decade high, and state governments are trying to help out.
Which states added new sales-tax holidays this year and what items are covered?
They're giving their residents a break, a tax break.
Families I spoke to for this story are spending hundreds of dollars for their children. So it's a high dollar amount that they spend, and that translates to at least a significant amount that they can save.
The Wall Street Journal's Lauren Azu has been reporting on state tax holidays. We'll talk with her about which states are giving what breaks and when, and how you can take advantage to save some money. That's after the break.
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A sales tax holiday means you can buy certain things tax-free or with lower taxes. The newest states to offer a week-long break are Illinois and New Jersey, but the deals vary state by state and timing is everything. The Wall Street Journal's Lauren Azu has been looking into tax holiday policies across the country, and she's here now. Hi, Lauren. Hi there.
Thanks for having me.
Thanks for being here. What have you seen states doing when it comes to tax holidays?
More states are beginning to offer state sales tax holidays. And so that means they are completely eliminating or reducing their state sales tax on certain items. So, for example, this year, Illinois has a new state sales tax holiday on certain back-to-school items, school supplies. Florida has a sales tax holiday on items for hurricane preparedness, as well as back-to-school supplies. And Tennessee has a sales tax holiday on gun safes, and I guess that is to encourage gun safety. Gun safes.
Why are states expanding tax holidays now — are they a response to inflation?
Okay. A number of states have introduced new tax holidays this year. What are you seeing behind that decision?
So this year, Americans have coped with record high inflation, and so that's driving the decision on many states' parts. And Actually, the governor of Michigan, Gretchen Whitmer, announced that she would propose a state sales tax on back-to-school items in that state.
So we may be seeing even more of these tax holidays. You've been going over some recent data from the National Retail Federation and Prosper Insights and Analytics, and you've been talking to families with school-age children directly. What does their spending picture look like, and how could one of these tax holidays impact that?
Families spend an average of $864 on school items, more than $15 than last year. And the families I spoke to for this story are spending hundreds of dollars for their children. So it's a high dollar amount that they spend, and that translates to at least a significant amount that they can save.
That discount, it's not a 40% discount, for example. It's a few percentages, right?
Yeah, it's a few percentages off, and it depends on the state. However, a lot of retailers are offering associated discounts during these sales tax holidays.
So stores see a tax holiday coming, and then they announce their own discounts just to hurry people into the doors.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:00–0:36
2
What are state sales-tax holidays and how do they work?
0:36–0:49
3
Which states added new sales-tax holidays this year and what items are covered?
0:49–2:52
4
Why are states expanding tax holidays now — are they a response to inflation?
2:52–4:10
5
How much can families realistically save during back-to-school tax holidays?
4:10–6:01
Speakers
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