Annual sales tax holiday offers some relief for back-to-school

Faced with higher “fees” on cigarettes and car purchases, Oklahoma taxpayers will get a break August 4-6 with the annual sales tax holiday.

It begins at 12:01 a.m. on Friday and ends at midnight on Sunday.   Certain clothing and shoe purchases are exempt from sales tax for this time period only. Qualified items are exempt from all sales tax, including state, city, county and city sales taxes.

Retailers have to participate and may not charge state and local sales or use tax on most footwear and clothing that are sold for less than $100 during the holiday.

The Oklahoma Legislature passed Senate Bill 861 during the 2007 Legislative Session to help businesses by providing a boost in the economy and the consumer by allowing them to save money when shopping for clothing and shoes. There was an effort to stop the tax holiday in the 2017 session but that failed.

It was a reaction to a similar tax free weekend in Texas that was designed to help parents who were buying back-to-school clothes. Oklahoma was losing retail sales – especially near the Red River – and revenue.

In Oklahoma, sales of any article of clothing or footwear designed to be worn on or about the human body and the sales price of the article is less than one hundred dollars ($100) are exempt. This does not apply to the sale of any accessories, special clothing or footwear primarily designed for athletic activity or protective use that is not normally worn except when used for athletic activity or protective use, or to the rental of clothing or footwear.

Any special clothing or footwear that is primarily designed for an athletic activity or protective use that is not normally worn except when used for athletic activity or protective use for which it is designed. Accessories including jewelry, handbags, luggage, umbrellas, wallets, watches, and other similar items carried on or about the human body, without regard to whether worn on the body in a manner characteristic of clothing are considered taxable. The rental of clothing or footwear is also taxable.

If a retailer offers a discount to reduce the price of an eligible item to less than $100 the item will qualify for the sales tax exemption. This applies to all discounts even if a retailer’s coupon or loyalty card is required to secure the discount. If a retailer accepts a coupon that entitles the retailer to third-party reimbursement, such as a manufacturer’s coupon, the discount provided by the coupon does not reduce the item’s sales price for purposes of determining whether the item is eligible for the exemption.

If a customer buys an eligible item during the sales tax holiday and later exchanges it for the same item in a different size or color, tax is not to be charged even if the exchange is made after the sales tax holiday.

Eligible items sold to purchasers by mail, telephone, email or on the Internet qualify for the sales tax exemption if the customer orders and pays for the item and the retailer accepts the order during the exemption period for immediate shipment, even if delivery is made after the exemption period.

Planning now can save parents some money and headaches as they plan to send children back to school in August.

“Doing some advanced planning will add an important element of organization to your shopping. It’ll also help control your spending and your mood,” said Cindy Clampet, Oklahoma State University Cooperative Extension assistant state specialist, family resource management.

Begin by creating a budget for the amount the family wants to devote to school-related purchases. Factor in costs such as instrument rental, school pictures and sports participation.

Also, incorporate possible expenses associated with graduating seniors and the college application process, as well as transporting the children to school each day.

After establishing the budget, family members should research their options based on the amount of funds available, then come to an agreement on all purchases.

“Today’s technology makes it easy for consumers to find exactly what they want and in a price range that works for them,” Clampet said. “Just as important, negotiating the budget in advance gives families a chance to resolve any disagreements before getting to the store, where parents and caregivers may feel pressured to give into demands while in public.”

If the children change their minds or want to add to the shopping list once they get to the store, parents should help them make decisions that will allow them to stay within the established and agreed upon budget.

“Try not to go shopping if you’re feeling rushed or stressed,” Clampet said. “You don’t want to wait too late, either, or take someone who is already upset or in a bad mood because under these types of circumstances you could end up overspending falling short of what you wanted to accomplish during your shopping excursion.”

Even with a break on sales tax and strict adherence to a budget, some may struggle to cover back-to-school costs. For assistance in those cases, check the nearest county Extension office for a possible list of community organizations offering supplies for free or at a reduced price.

Families may consider building anticipated school expenses into the overall household budget as a wallet-friendly strategy that also can cut down on parents’ stress level.

“Tally all your expenses from this year, divide that amount by 12 and begin reserving that much money each month to put toward next year’s costs,” Clampet said.

(Leilana McKindra contributed to this story).