These states have 2025 sales tax holidays. Who stands to benefit

Yearly, a handful of states supply consumers a temporary tax break to encourage spending. This 12 months, a few of these “sales tax holidays” are occurring as President Donald Trump’s tariffs threaten to hike costs.

These holidays waive state gross sales tax (and generally native levies) on sure purchases for a set interval. Whereas eligible objects range by state, many embrace classes like back-to-school shopping or provides for catastrophe preparedness.

“Gross sales tax holidays are politically in style as a result of everybody likes tax aid,” mentioned Katherine Loughead, a senior coverage analyst and analysis supervisor with the Middle for State Tax Coverage on the Tax Basis, the place she has researched the topic.

However “it is not pretty much as good a deal” as policymakers and shoppers count on, she mentioned.

Extra from Private Finance:
Trump tariffs make investing ‘tricky,’ expert says
What private assets in 401(k) plans mean for investors
Ed Department launches college financial aid form sooner than expected

Whereas gross sales tax vacation supporters declare the coverage boosts economic growth, some research suggests that customers merely shift the timing of their important purchases, Loughead mentioned.

“Wealthier taxpayers are sometimes greatest positioned to learn from a brief exemption” as a result of they’ve the pliability to decide on when to make purchases, Miles Trinidad, a state analyst for the Institute on Taxation and Financial Coverage, wrote in a July blog post.

Nonetheless, some middle- to lower-income households do plan for yearly gross sales tax holidays, notably for larger purchases like back-to-school procuring, consultants say.

Shelly Werger, a mom of seven in Guttenberg, Iowa, says she tracked the timing of her state’s Aug. 1-2 gross sales tax vacation. “All the pieces is simply getting so costly proper now that I’m doing every thing I can to economize right here and there,” she mentioned.

Nonetheless, in Iowa, the exemption solely covers clothes and footwear under $100 and never faculty provides, computer systems or sports activities gear — “we get a bit of little bit of financial savings however not quite a bit,” Werger mentioned.

For 2025, 19 states have held or will hold sales tax holidays, which matches the quantity from 2024, in keeping with the Tax Basis, as of July 22. 

Here is a breakdown of the dates for 2025, eligible objects and worth limits.

Any money-saving alternative, notably forward of the height back-to-school shopping season, generally is a profit for households squeezed by increased prices.

A survey performed final 12 months by ParentsTogether, a nationwide parenting group, discovered that 75% of fogeys mentioned back-to-school procuring causes important stress, and 47% reported reducing again on meals to afford faculty provides.

Extra lately, a report from Intuit Credit Karma discovered that 39% of fogeys mentioned they have been unable to afford back-to-school procuring this 12 months, up from 34% in 2024. Lots of them began procuring sooner than ordinary to arrange for tariff-related worth hikes and to reap the benefits of gross sales tax holidays together with different summer time gross sales, the report discovered. 

“Households are kicking off their back-to-school procuring earlier this 12 months and are holding an eye fixed out for key methods to avoid wasting, together with retailer gross sales and offers in addition to occasions like tax-free holidays,” mentioned Katherine Cullen, the Nationwide Retail Federation’s vice chairman of business and shopper insights.

Whereas skipping the state tax might save as much as 7% in some locations, “the even larger impression is whenever you mix that low cost with different financial savings methods,” suggested Ted Rossman, Bankrate’s senior business analyst.

For instance, “you may mix that with a retailer promotion — possibly they offer 30% off. You might use a rewards bank card for five% money again. And as an example you employ a web-based procuring portal… for an additional 10% money again,” Rossman mentioned. “One thing that may have value you $100 (inclusive of gross sales tax) now may cost about half that.”