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Back-to-School Tax Break



The state of Tennessee's annual Sales Tax Holiday is held every year on the first Friday in August and ends the following Sunday night. This year's tax-free holiday weekend begins at 12:01 a.m. on Friday, August 3rd, and ends Sunday, August 5th, at 11:59 p.m. Here are some guidelines consumers need to follow:

What items qualify for the sales tax holiday? During the holiday, the following items are exempt from sales and use tax: 1) clothing with a price of $100 or less per item; 2) school and school art supplies with a price of $100 or less per item; and 3) computers with a price of $1,500 or less per item.

How do I claim the exemption? The exemption is based on the purchase of items that qualify for the holiday. No identification or exemption certificate is required. As long as you purchase an item that qualifies to be sold tax-exempt, you should not pay sales tax on the item sold.

What merchants are participating in the sales tax holiday? Merchants who sell the items listed above must participate in the sales tax holiday. If a merchant sells only to other businesses (purchases for a business do not qualify for the holiday) or does not sell items that qualify for the holiday (example: a car dealer), then the merchant is NOT required to participate in the holiday.

Can I buy items out of town or out of state and still qualify for the holiday? Purchases can be made from Tennessee retailers, including retailers that sell through the internet or catalog if those items are to be delivered into Tennessee.

Does the $100 exemption apply to the first $100 of a school supply or an item of clothing being purchased? In other words, if the selling price of a book or a clothing item is $105, is the first $100 exempt from sales tax? No. The exemption applies to items selling for $100 or less. If an item sells for more than $100 ($105 in this example), tax is due on the entire selling price.

What items of clothing qualify? Clothing is defined as human wearing apparel suitable for general use. This includes shirts, dresses, pants, coats, gloves and mittens, hats and caps, hosiery, neckties, belts, sneakers, shoes, uniforms (whether athletic or nonathletic), and scarves. Clothing DOES NOT include belt buckles sold separately, patches and emblems sold separately, sewing equipment, and supplies or sewing materials that become part of "clothing" such as thread, fabric, yarns, and zippers.

While clothing is eligible for the holiday, clothing accessories, protective equipment, and sport or recreational equipment are NOT eligible for the holiday and are subject to tax during the holiday period.

What types of items qualify as school and school art supplies? A school supply is defined as an item used by a student in a course of study. The definition contains an all-inclusive list of school supplies. Examples are binders, book bags, calculators, tape, chalk, crayons, erasers, folders, glue, pens, pencils, lunch boxes, notebooks, paper, rulers, and scissors. School art supplies are defined as clay and glazes; acrylic, tempera, and oil paints; paintbrushes for artwork; sketch and drawing pads; and watercolors.

What qualifies as a computer? A computer is defined as a central processing unit (CPU), along with various other components including monitor, keyboard, mouse, cables to connect components, and preloaded software. While the CPU may be purchased separately, other items must be part of a bundled computer package in order to be eligible.

Excluded from the holiday are individual computer parts, such as monitors, keyboards, speakers, and scanners when not sold in conjunction with a CPU.

Do school textbooks or workbooks qualify for the holiday? School textbooks and workbooks are exempt from sales tax. They do not qualify for the holiday, because they fall within the school instructional material exception. However, because they are already exempt from tax, no holiday is necessary on these items.

Is there a limit to the number of items that may be purchased? There is no limit to the quantity of items that may be purchased as long as the purchase price of each of those items is below the threshold provided in the law.

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