Tennessee’s tax-free weekend is just a few days away, and UT taxation expert LeAnn Luna offers some advice to help you spot a good deal—and know when it might be more prudent to wait for a regular store sale.
Luna is a professor of accounting and works in the Boyd Center for Business and Economic Research in the Haslam College of Business.
Tennessee’s tax-free holiday begins at 12:01 a.m. July 26 and continues through 11:59 p.m. July 28.
Is tax-free shopping a good way to save money?
“The Tennessee sales tax holiday is a 10 percent sale (actually 9.25 percent to 9.75 percent, depending on your county) on most clothing, computers, and school supplies. The question for shoppers is ‘Would you buy the item outside the sales tax holiday weekend if the retailer offered it for a 10 percent discount on the retail price?’ If the answer is yes, the sales tax holiday provides a good opportunity to purchase the goods.
“Anyone who buys clothing knows that markdowns of 20 percent to 50 percent are common, and some studies show that retailers offer fewer sales during sales tax holidays when their stores are predictably full of eager shoppers. Consumers should be aware that the 10 percent discount during the sales tax holiday might not be as good a deal as waiting a week or month for the traditional markdowns.”
What items are tax-free?
“Most individual items of clothing, including shoes, which cost less than $100 qualify for the sales tax holiday. General-purpose exercise clothing (e.g., athletic T-shirts, shorts, or socks) qualifies, but specialized clothing for specific sporting activities does not. For example, cleated shoes for soccer or football, ballet or specialized dancing shoes, baseball or football helmets, softball gloves, and football shoulder pads do not qualify.
“Computers priced under $1,500 qualify, but many related items—such as printers, printer supplies, printer paper, storage drives (thumb drives, disks), software, and computer games—do not. Smart phones also do not qualify for the sales tax holiday.
“Most school supplies will qualify. Some specialized items used by artists, such as some types of paint, may not qualify, so buyers should confirm which art supplies are eligible.”
The State of Tennessee has prepared a list of items that do and do not qualify.
Does the tax-free holiday promote economic growth or consumer spending?
“Many studies show the primary impact of the sales tax holiday is to change the timing of purchases. Retail sales of impacted items are lower in the weeks before and after the inflated sales during sales tax holiday, and there’s little evidence that overall sales, employment, or economic activity increase by significant amounts.”
LeAnn Luna (865-974-6080, firstname.lastname@example.org)
Erin Hatfield (865-974-6086, email@example.com)
Amy Blakely (865-974-5034, firstname.lastname@example.org)