What you need to know about the sales tax holiday
• Clothing is defined as all men’s, women’s and children’s apparel suitable for general use. Traditional items such as shirts, pants, skirts, sweaters, dresses and shoes are included, but so are disposable diapers, formal wear and wedding apparel. Visit www.tax.ohio.gov for a complete list.
• The exemption only applies to items selling for $75 or less. If an item of clothing sells for more than $75, the tax is due on the entire selling price. In addition, retailers cannot split items that are normally sold together in order to fall under the sales price threshold. .
• School supplies are defined and include items such as crayons, notebooks, binders, book bags, calculators, composition and spiral notebooks, etc. Visit www.tax.ohio.gov for a complete list.
• If a retailer offers a discount to reduce the price of an eligible item to $20 or less (applies to school supplies) or $75 or less (applies to clothing), the item will qualify for the exemption. This applies to all discounts even if a retailer’s coupon or loyalty card is required to secure the discount.
Source: Ohio Department of Taxation
Retailers are gearing up for big crowds of back-to-school shoppers this weekend for the state’s tax-free holiday, which last year saved consumers more than $3 million in sales tax.
Under the sales tax holiday that begins Friday, certain items are exempt from sales tax, including clothing priced up to $75, school supplies and instruction material priced under $20.
Ohio’s initial sales tax holiday last August boosted sales tax revenues by $4.7 million and saved shoppers $3.3 million on sales tax, according to a study from the University of Cincinnati. Local business officials expect to see that revenue increase again this weekend.
“I would anticipate that we’re going to see that same, if not greater increase, when you compare August 2015 to August 2016 following the sales tax holiday,” said Chris Kershner, vice president of public policy and economic development for the Dayton Area Chamber of Commerce.
The sales tax holiday, which continues through midnight on Sunday, provides much-needed relief to hard-working families who incur extra educational costs every year before their children go back to school, Kershner said.
Ashley Phillips, store manager of the Walmart located at 8800 Kingsridge Drive, said the weekend is really about providing relief to parents who have increased expenses as the academic year starts.
“Last year was the first year for this, so I don’t know customers really fully understood the deals going on,” she said. “We’re prepared for larger crowds this year.”
Walmart will offer more than 1,000 items for under $3, and about 100 items for $1 or less. Phillips compared the sales tax holiday to Black Friday crowds. To manage the registers and apparel department, she said they’ll bring in several extra workers.
“We will have a small army ready to serve customers this weekend,” she said.
The National Retail Federation estimates the average family will spend $674 per household on back-to-school supplies, up from last year’s $630.
In August 2014 — prior to a sales tax holiday being implemented — the sales tax collection in Montgomery County was $6.2 million, according to the Dayton Area Chamber of Commerce. For the entire region, sales tax collections were $18.6 million that year.
In August 2015, sales tax collection increased by 4.22 percent in Montgomery County, bringing in $6.4 million. For the region, tax collection reached $19.9 million in August of last year — an increase of almost 7 percent.
“I really compliment the state legislature and the governor for having the foresight to implement a sales tax holiday that really is a win-win-win for everyone involved,” Kershner said. “It’s a win for the parents. It’s a win for Dayton and Ohio businesses. And it’s a win for the state of Ohio because they see increased economic stimulus.”
Joy Christian of Springboro said she took advantage of the tax-free weekend last year and expects to shop again this weekend.
“You don’t save a lot, but every little bit counts when you’re buying for as many as I am,” said Christian, a mother of three school-aged parents.
Shopping centers like The Greene Town Center have promoted the holiday to customers through social media and their websites. Steve Willshaw, the general manager of The Greene, told the Dayton Daily News that the shopping center was excited to participate in the sales tax holiday weekend again.
“We hope shoppers from Beavercreek and across the Dayton region will choose The Greene when deciding where to buy back-to-school essentials,” he said.
The sales tax holiday is not permanent. The Ohio bill creating the holiday is only for 2016. State Rep. Niraj Antani said legislators will try to pass a deal next year to make it a reoccurring, permanent tax break.
“We and the legislature want to try and provide as much tax relief as possible,” Antani said.
The holiday generates economic revenue, Antani said, and helps Ohio compete with bordering states. Both Kentucky and Indiana do not currently offer tax reliefs for the back-to-school holidays, so it drives consumers to the state.
“It keeps more dollars in Ohio and with Dayton businesses,” Kershner said. “This gives us a competitive advantage over those states. When you can do more to stimulate local businesses, that helps support local families and local jobs.”
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