Nashville, TN – 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 12:01am on Friday, August 1st and ends Sunday, August 3rd at 11:59pm.
What is Tax Free? Clothing $100.00 or less. School Supplies $100.00 or less. Computers $1500 or less.
Clothing ($100.00 or less per item)
Examples of tax-free items during the holiday include:
During the holiday, clothing with a purchase price of $100.00 or less per item is exempt from sales tax. Clothing items costing more than $100.00 or any clothing purchased for use by a trade or business is not exempt from tax. Items that are normally sold together, such as shoes, may not be split to achieve the $100.00 threshold.
Additionally, there is no requirement that purchases be made only for students. If an item is tax exempt, anyone may make the purchase tax–free.
For layaway sales, qualified clothing is exempt when final payments are made by customers on items previously placed on layaway. When customers put clothing items on layaway during the holiday period, they will also be tax-exempt when final payment and delivery is made after the exemption period.
School Supplies ($100.00 or less per item)
Examples of tax-free items during the holiday include:
During the holiday, school supplies (including school art supplies) with a purchase price of $100.00 or less per item are exempt from sales tax. School supplies individually priced at more than $100.00 or items purchased for use by a trade or business are not exempt from tax.
School supplies are defined as items used by a student in a course of study. Specifically excluded are items such as instructional material, including reference books and school computer supplies (compact discs, printers, and printer ink).
Computers ($1,500 or less)
During these holidays, computers with a purchase price of $1,500 or less, not for use in a trade or business, are exempt from tax. Laptop computers, if priced at $1,500 or less, also qualify as well as tablet computers. Additionally, there is no requirement that purchases be made only for students. If an item is tax exempt, anyone may make the purchase tax–free.
For purposes of this exemption, 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. Software beyond what is preloaded with the computer package is not exempt from tax.
The following items are NOT exempt from tax:
- Computer parts, such as monitors, keyboards, speakers, and scanners when not sold in
conjunction with a CPU
- Individually purchased software or other software not part of a preloaded software package on
the initial purchase of a computer
- Storage media, such compact disks and USB flash drives
- Handheld electronic schedulers
- Personal digital assistants (PDAs) and electronic readers (i.e., Kindle, Nook, etc.)
- Video game consoles
- Computer printers and supplies for printers, such as paper and ink
For layaway sales, qualified computer purchases are exempt when final payments are made during the holiday by customers on items previously placed on layaway. When customers put computers on layaway during the holiday period, they will also be tax-exempt when final payment and delivery is made after the exemption period.
What is a Sales Tax Holiday?
When is Tennessee’s Sales Tax Holiday?
Sales Tax Holidays begin every year at 12:01am on the first Friday in August and end at 11:59pm the following Sunday. During this time, Tennesseans can enjoy tax-free purchases on certain clothing, school and art supplies and computers.
Tax-free items include clothing with a price of $100.00 or less per item, school and school art supplies with a price of $100.00 or less per item and computers with a price of $1,500 or less. These items are exempt from state and local sales tax in Tennessee during the holiday. Local governments are held harmless and are reimbursed lost sales tax revenues by the state.
Who Can Participate?
Any individual can make a tax-free purchase during the holiday. However, items purchased for use by a trade or business are not exempt.
Can I Order by Mail, Telephone, E-Mail or Internet?
The holiday also includes purchases of qualified items sold via mail, telephone, e-mail or Internet if the customer orders and pays for the item and the retailer accepts the order during the holiday for immediate shipment, even if delivery is made after the exemption period.
What if the Item is Backlogged or on Back order?
If a customer wishes to order a certain tax-free item during the holiday and it is not in stock, the item remains tax-free upon delivery. In other words, backlogs and back orders outside the buyer’s control will not affect the exempt status of tax-free items. Intentionally delayed sales are taxable.
What if I Want to Place an Item on Layaway or Pay for an Item That is Currently On Layaway?
Qualified items previously placed on layaway are exempt when the final payment is made during the holiday. Items are also exempt if placed on layaway during the holiday and the final payment is made after the exemption period.
When Did Sales Tax Holidays Start in Tennessee?
Tennessee Code Annotated 67-6-393 established annual sales tax holidays in Tennessee in 2006. The first Sales Tax Holiday was August 4th-6th, 2006, saving Tennesseans about $15 million. Since then, Tennesseans have enjoyed $8 to $10 million in tax savings each holiday.