With back-to-school sales starting, plan to capture even more savings during Iowa’s Annual Sales Tax Holiday, Aug. 7-8. With some careful planning, this opportunity provides a helpful, targeted financial break for families, said Carol Ehlers, a health and human sciences educator with Iowa State University Extension and Outreach.
The Iowa Legislature approved the sales tax holiday in 2000 to help boost the economy and give consumers a break. Previous tax-free holidays have shown to pump up sales for everyone, from big-box retailers to mom-and-pop shops. Some merchants report double-digit increases in sales, compared to a typical August weekend.
During the first Friday and Saturday of August, households can expand student wardrobes without paying state and local sales tax. This means consumers will save at least $6 on every $100 they spend on clothing and shoes.
“With the average family spending $864 on K-12 back-to-school items, that’s almost as much as people spend for the winter holidays,” Ehlers said. “Many households set aside money year-round to help cover their holiday expenses and they should be doing the same for back-to-school purchases. This should not be a surprise and needs a spending plan.”
Iowa’s annual sales tax holiday kicks off at 12:01 a.m. on the first Friday in August and runs through midnight Saturday. Sunday purchases are fully taxed. State sales tax of 6% and any local option sales tax are waived on eligible items. Many municipalities have a separate 1% sales tax for the city and school district, which is also waived.
Since the two-day event falls during the back-to-school shopping season, the exemption applies only to certain apparel and footwear priced less than $100. Exemptions do not apply to the prices of an item selling for over $100.
Other examples of items that are still taxable during Iowa’s tax free weekend include, jewelry, watches and watchbands, umbrellas and sports equipment such as skis, swim fins, rollerblades and skates, as well as clothing or footwear designed specifically for athletic use.
For a full list of items eligible during this tax-free event, go to the Iowa Department of Revenue’s website.
