Now that back to school season is upon us, my state and many others are promoting their upcoming tax free weekends. These are the weekends where you can buy items from certain categories and escape the state and/or local sales taxes on those items. The rules vary by state, but typically the items you can buy tax free include computers, some computer software and hardware, clothes, school supplies and reference books. To get customers and take advantage of increased traffic, some stores that don’t sell exempt items will have sales where they mark items down the percentage of the tax. For example, a local furniture store had a sale where everything in the store was 8% off (the amount of our tax). These weekends bring shoppers out in droves, clogging parking lots and creating long lines as people seek to dodge the tax. The question is: Can you really save money on these weekends? Is it worth it to brave the hordes?
The answer is maybe. Like so many things, it depends on the items you buy and how willing you are to shop for deals. The problem that I have seen with these weekends is that many retailers don’t combine the tax savings with significant markdowns. They are banking that the increased traffic and the frenzy created by the “tax free” notion will get people in a spending mood and trick them into thinking that everything is a bargain.
On these weekends, you are more likely to pay full retail or only slightly less for the product and only save the tax. This may not be as good a deal as waiting for a great sale. For example, let’s say tax in your state is 8%. If you buy the item at full price but escape the tax, it’s like the item is on sale for 8% off. But if the item you want goes on sale next week for 40% off but you have to pay tax, that’s a savings of 32% compared to buying it on tax free weekend. Waiting for the sale is the better deal in this case.
So what should you think twice before buying on tax free weekends? Many school supplies can be found at rock bottom prices aside from the tax free weekends. Stapes and Office Max routinely run penny or ten-cent sales on things like paper, pencils, and erasers. If you wait a few weeks the supplies will go on clearance to make way for holiday merchandise. Clothing is always going on sale, whether it’s to clearance older merchandise or just a sale to draw customers to the store. Many computers, monitors and printers are frequently put on sale, or you can buy a fully refurbished model with warranty for a substantial discount. Many things can be found online at prices lower than those in the stores, tax free or not. If you don’t need the item this instant, waiting for a sale or buying online can be a better deal than tax free weekend.
So when is tax free weekend a good deal? It’s a good deal when the item you’re buying doesn’t go on sale regularly and the tax break is the only deal you’re going to get. A good example of this is an Apple Mac computer. Apple never puts their products on deep discount. The only price breaks they give are for student bundles or refurbished units. If you have your heart set on an Apple, saving the sales tax can be a good price break. Incidentally, people know this so lines are usually very long at the Apple store. Get there early if you want a Mac. Software is also a category that doesn’t see a lot of sales, so if there’s something you need this might be the time to get it (games usually don’t count).
You can also do well if you hit on a merchant that is giving the tax break as a “sale” to drive traffic, even though their items aren’t technically exempt. Some electronics, furniture, mattress, or other big ticket retailers (even car dealers), may cut a price break equivalent to the sales tax in your area just to boost sales. If this is the case and they have an item that normally doesn’t go on sale, this could be your time to pounce. Also, if a retailer does combine the tax free event with a good sale, this is a chance to increase your savings. Or, if you need something right now and can’t wait for a sale, you might as well save the tax. It’s better than nothing.
To get the best deals, spend some time before the tax free event getting to know the prices of the items that interest you. Know what goes on sale and what doesn’t, and what’s a good deal at what price. Read store flyers the week of the event and take note of additional sales or coupons that you can combine with the tax free event. Know what’s included in your state’s tax free event. Nothing stinks more than loading up a cart with items you thought were tax free only to find out that they aren’t. You can only score the best savings if you know what really constitutes a deal.
And some final words of advice: Be prepared for crowds. In our state, the popularity of this event has grown steadily over the years with more and more items being included each year and more retailers hungry to cash in on the increased traffic that weekend. Go early, plan your attack in advance (i.e, plan to get to the items with the most savings first), and have a list of items you need. Guard against impulse spending. A lot of people see things while they’re shopping and think, “Well, it’s tax free so I might as well get it.” This leads to a much larger bill than you anticipated, which the retailers love (and they are banking on) but isn’t so good for you.
Or you can take my approach and stay home, out of the madness. Yes, I like to stick it to the man now and then and avoiding sales tax is one way to feel like I’m accomplishing that. But the increased crowds, the traffic, the rude people clamoring for the last of something, and the retailers who look to take advantage of people who think everything is a deal, drive me to stay home. I’ve always found that I can do better and keep my stress levels low by shopping at other times. I’ll just wait for the sales and get what I need later.