State back-to-school tax-free weekends and sales tax holidays for 2023

About 45 sales tax holidays are on the 2023 calendar, and by the time the last state legislative session comes to a close, there may be even more. 

Many tax-free weekends and longer sales tax holidays are geared to the back-to-school crowd. They typically take place during the summer and give families with growing children an opportunity to purchase clothing and a variety of school supplies tax free. As you can imagine, tax-free weekends tend to be popular among consumers.

But sales tax holidays can be a bear for retailers. For the most part, all retailers that are registered to collect and remit sales tax in a state are required to comply with any sales tax holidays that state provides. “All retailers” includes out-of-state online sellers as well as in-state brick-and-mortar merchants.

Depending on the state, sales tax holidays can last anywhere from one day to one year or even longer (Florida is a fan of the yearlong sales tax holiday). The temporary sales tax exemptions often (but not always) apply to specific types of products, such as clothing, energy-efficient appliances, or school supplies, and are frequently subject to price caps. 

No two sales tax holidays are exactly alike, even when they’re variations on a theme — like back-to-school sales tax holidays. As a result, the back-to-school sales tax holiday season can be particularly challenging for businesses that sell qualifying products into multiple states.

Read on for a list of 2023 summer sales tax holidays focusing on clothing and/or school supplies, followed by our sales tax holiday FAQ.

Below is a list of states with a back-to-school sales tax holiday in 2023. Some states include “back-to-school” in the name of the tax-free weekend, others stick to more generic descriptions.

See the 2022 back-to-school tax-free weekends.

• What are sales tax holidays?

• When does a sales tax holiday start and end?

• What qualifies for the exemption?

• Do sales tax holidays apply to local sales tax?

• Do tax-free weekends have price restrictions?

• Can sellers absorb sales tax during a sales tax holiday?

• Are shipping and delivery charges exempt during tax-free weekends?

• How does a sales tax holiday affect layaway sales?

• How do sales tax holidays affect returns and exchanges?

• Do marketplace sellers need to worry about tax-free weekends?

• How do sales tax holidays affect economic nexus (and vice versa)?

Sales tax holidays (also known as tax-free weekends), are periods when specific products that are ordinarily subject to sales tax are temporarily exempt from state and/or local sales tax.

Many tax-free weekends start on a Friday and run through the following Sunday, but some sales tax holidays last as little as one day and others as long as a week. It depends on the state and the holiday.

There have been Florida sales tax holidays that last for a month or two, or even a year or two: The Florida sales tax holiday for diapers and apparel for young children and the Florida sales tax holiday for energy-efficient appliances began on July 1, 2022, and won’t conclude until June 30, 2023. The Florida sales tax holiday for impact-resistant doors, garage doors, and windows runs July 1, 2022, through June 30, 2024.

Most states provide a precise start and stop time for their sales tax holidays. For example, Texas tax-free periods typically start at 12:01 a.m. and end “at midnight.” Arkansas sales tax holidays usually conclude at 11:59 p.m. Sometimes that information is provided on the department of revenue website, but you may have to hunt for it in the state’s tax code.

If you’re registered for sales tax in a state with a sales tax holiday, be sure your point-of-sale (POS) system is set up to exclude sales tax as soon as the sales tax holiday commences — and to reinstate tax collection the moment it concludes. While states may not penalize an otherwise compliant retailer for incorrectly taxing sales for one minute, they could. It’s best to strive for punctuality.

Tax-free weekends affect a host of products but usually don’t apply to all transactions. Thus, although “clothing and footwear” qualify for the Connecticut sales tax holiday, ski pants and sports uniforms do not.

Massachusetts has one of the broadest tax-free weekends. Any single item of tangible personal property priced $2,500 or less qualifies for the Massachusetts sales tax holiday.

Sales tax holidays affect both state and local sales and use taxes in many states, including Iowa, where qualifying items are exempt from all applicable sales and use taxes.

But that’s not always the case. Alabama and Missouri are among the states that generally allow local governments to opt in or out of a sales tax holiday. As a result, local sales tax in those states may or may not apply to qualifying items during a tax-free weekend; it depends on the location of the transaction. 

Finally, some local jurisdictions in Alaska offer a sales tax holiday for sales occurring within the jurisdiction. Since there’s no statewide sales tax in Alaska, local sales tax holidays impact applicable local sales taxes only.

The temporary exemptions provided under a sales tax holiday are subject to price restrictions in a majority of states: Eligible items priced at or below the price threshold qualify for the exemption, while more expensive items don’t. 

Typically, a state will set several different price restrictions. For example, the New Mexico sales tax holiday applies to computers priced up to $1,000; computer-related items priced up to $500; handheld calculators priced under $200; bookbags, clothing, and footwear priced under $100; and school supplies priced under $30.

On the other hand, the Massachusetts sales tax holiday applies to single items of tangible personal property priced $2,500 or less, and the South Carolina tax-free weekend has no price restrictions. 

The Florida sales tax holidays deserve special mention here because Florida has taken to providing a temporary sales tax exemption for a portion of the sales price of hundreds (if not thousands) of products. For example, the first $5 of fishing tackle or the first $150 of the sales price of water skis are exempt, but any amount over those thresholds are subject to sales tax.

Absorbing sales tax occurs when a vendor pays the tax due without passing the tax on to the consumer. Some states allow vendors to absorb sales tax; others don’t.

Vendors are permitted to absorb some or all of the sales tax during the Shop Maryland Tax-Free Week, so while the temporary sales tax exemption applies only to clothing and footwear priced $100 or less, vendors can absorb and pay the tax on clothing and footwear priced greater than $100. They can also absorb and pay the tax due on items not eligible for the sales tax holiday. Specific reporting requirements apply. 

It’s currently against the law for retailers to absorb sales tax in Alabama and Connecticut.

Shipping, handling, and delivery charges may or may not be exempt during sales tax holidays; as always, it depends on the state.

Delivery, handling, and shipping charges are considered part of the sales price in Texas, so if shipping fees push the cost of a product above the price threshold, the transaction won’t qualify for the sales tax holiday. For example, a pair of shoes selling for $99 would qualify for the exemption if picked up in person, but if the shoes are shipped and a $5 shipping charge applies, the sales price would jump to $104 and the shoes would not qualify for the temporary sales tax exemption.

Separately stated shipping or delivery charges are generally excluded from the sales price in Maryland and therefore don’t affect the taxability of eligible items in Maryland. But if “a combined shipping and handling charge is legally considered as part of the sales price,” it has to be added to the price of eligible clothing and can then push a transaction over the price threshold. 

And during the Connecticut sales tax holiday, “adding shipping and delivery charges to an item of clothing or footwear costing less than $100 does not make the item taxable, even if the price of the item exceeds $100 after the shipping and delivery charges are added.” [Emphasis added.]

A layaway is a purchase agreement in which a customer puts a deposit on an item and the retailer pulls it from inventory and holds it for them. Whether a layaway sale qualifies for a temporary sales tax exemption depends on the state.

Eligible items placed on layaway during the Missouri tax-free weekend don’t qualify for the exemption if the final payment is made after the holiday period. However, eligible items that were placed on layaway prior to the holiday period do qualify for the exemption provided the final payment is made during the sales tax holiday.

It’s different in Connecticut. Eligible items placed on layaway during a Connecticut sales tax holiday qualify for the sales tax exemption provided any additional charges applied to a layaway sale don’t push the sales price over the $100 threshold. All subsequent payments are exempt from sales tax even if made after the holiday concludes.

Layaway sales are not eligible for the sales tax holiday exemption in Massachusetts.

As always, the answer varies by state. 

No sales tax is due on exchanges made after the Massachusetts sales tax holiday. Similarly, no tax is due in West Virginia if a customer buys an eligible item during the tax-free period then exchanges it for the same item in a different size or color — even if the exchange is made after the end of sales tax holiday.

However, if a consumer buys an eligible item during the West Virginia sales tax holiday and returns it after the tax holiday period for credit on the purchase of a different item, the retailer must charge sales tax on the sale of the newly purchased item.

All states with a general sales tax require certain online marketplace facilitators to collect and remit sales tax on behalf of their marketplace sellers. For the most part, this requirement kicks in if the marketplace has sales tax nexus with the state. 

Sales tax nexus is a connection that enables a state to require a business to collect and remit sales tax. The two most common ways to establish sales tax nexus with a state are by having a physical presence in the state or by having a certain degree of economic activity in the state.

Large marketplaces facilitators like Amazon, eBay, and Etsy have sales tax nexus with all states. Such marketplaces should know about sales tax holidays and exempt all qualifying sales during the duration of the tax-free weekend. 

New and emerging marketplaces may not be required to collect and remit on behalf of third-party sellers in some states and may not be aware of all sales tax holidays.

All states with a general sales tax have economic nexus laws, and all provide an exception for remote businesses whose sales into the state are below the state’s economic nexus threshold. This state-by-state guide to economic nexus laws provides state-specific threshold details.

Sales tax holidays can impact an online seller’s economic nexus status by catapulting its sales over the state’s economic nexus threshold. Any business that sells qualifying items during a sales tax holiday could see a surge in sales during the tax-free weekend, and in some states, economic nexus is established when a remote seller makes 200 separate transactions or $100,000 in annual sales. 

It’s important to track your nexus because some states require businesses to start collecting sales tax as soon as they cross the economic nexus threshold.

Economic nexus impacts sales tax holidays because businesses with no physical presence in a state can be required to comply with a sales tax holiday in that state. 

In other words, a business based in Montana that sells fishing supplies to consumers in Florida would have to understand and comply with a Florida sales tax holiday that provides a temporary sales tax exemption for fishing rods and reels with a sales price of $75 or less ($150 or less if sold as a set). If the Montana business also sells clothes, it could be required to comply with back-to-school sales tax holidays in other states.

Economic nexus laws can affect international sellers as well as U.S. companies. If you hit an economic nexus threshold in a state, you’re required to register and comply with the state’s sales tax laws whether you’re located in a neighboring state, Canada, or Australia.

Although there are a lot of summer back-to-school sales tax holidays, tax-free weekends can happen at any time. Check out our 2023 sales tax holidays guide to learn about disaster preparedness sales tax holidays, energy-efficient sales tax holidays, and more. 

And if you’re concerned you may be approaching a state’s economic nexus threshold, take our sales tax risk assessment.

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