This weekend in our home state of Massachusetts, consumers will be treated to two days of tax-free shopping. Many people see this as an excellent opportunity to bite the bullet and make a big purchase that they’ve been putting off. Maybe a new computer, washing machine, set of tires, or anything else less that $2,500. But is it really a deal, or just a gimmick? Opinions vary…
Here’s the deal:
The one-time tax break will apply to retail sales, but will exclude any single item priced higher than $2,500. It also excludes vehicles, motor boats, tobacco, meals and utilities.
Several other states offer similar tax holidays. Some for a day, some for a weekend, some for an entire week. It is typically done in the summer months when retail shopping is down. The idea is to boost sales for the retailers and also provide some relief to consumers. The downside is of course that the state loses that income. Last year, Massachusetts lost an estimated $23 million for the weekend.
Some argue that everyone would be better off if the state would just lower the tax rate year round from 6.25% to 5%. Others love the opportunity to save some money on a large purchase. Just be sure that you’re getting the right deal. Some retailers may mark up their prices to cover the sales tax. Some might even offer to discount by that amount before the actual holiday to try to get your business sooner.
As with any shopping trip, your best bet is to find items that are already discounted, that you actually need. I, for example, do not own a grill. I could sure use one, and now is the time of year when many retailers will discount this year’s inventory. Add the tax holiday and I’ve got a recipe for a great deal.
- Use coupons
- Shop early to get the best selection and avoid crowds
- Find out what is and is not eligible for the tax exemption before you shop
What do you think? Is this a good time to shop? Do you think tax holidays are a good idea, or would you rather a lower tax rate year-round?