For many small business owners, sales tax holidays are a chance to showcase their business and the importance of shopping small.
Sales tax holidays are a great way for small business owners to boost their sales during the important back-to-school shopping season.
At least 16 states are offering sales tax holidays in 2019, with most states kicking off the holiday in August. During these events—which typically last three to seven days—customers don’t have to pay sales tax on certain types of merchandise, such as clothing, footwear, computers, school supplies, and electrical equipment. Businesses don’t have to sell children’s merchandise for their products to qualify for the exemption.
“It’s a partnership between locally-owned small businesses and their customers and community,” says Jason Espinoza, NFIB’s New Mexico State Director. “The tax holiday provides an opportunity for local, small businesses to highlight many of their unique products and customer service.”
While merchandise purchased in stores, online, or by mail order during the tax holiday generally qualifies for the exemption, business owners should check their state rules to learn what merchandise sales are tax exempt and other details about the holiday. Even when merchandise categories are exempt from sales tax, there may be restrictions, such as the maximum cost of products eligible for the exemption.
Preparing for the Sales Tax Holiday
As the holiday draws near, share what makes your small business stand out. You might offer additional promotions on products that differentiate your business from your competition.
Some retailers cover shoppers’ sales tax on certain products that are not included in the exemption. Others offer discounts on specific items or hand out coupons for future promotions. “This is a great way to create a promotional package that’s anchored in the tax holiday but brings your uniqueness to the forefront as well,” Espinoza says.
Generate foot traffic by reaching out to customers through email, social media, and other channels. In your promotions, talk about your personal connection to the community, Espinoza says. “One advantage small businesses have is that people know who you are,” he says. “You’re their neighbor. Their children go to school with your children. Use that to your advantage. People want to invest in their friends and neighbors—by buying local, that’s exactly what they’re doing.”
Showcasing Your Small Business
Make sure your customers know they can save by shopping with you during the tax holiday—even if they don’t need school clothes. Consider adding a sign to your storefront highlighting the event and putting a banner on your website. Let shoppers know in advance what items will be tax exempt and whether you plan to offer additional discounts.
After you’ve planned your promotions and ramped up your marketing, make sure your business is staffed appropriately during the tax holiday. You’ll want to provide great service to returning customers and make a good first impression on new shoppers. “Given the investment in promotion and marketing, do expect increased foot traffic,” Espinoza says. Determine what hours are likely to be busiest and when you might need extra help.
States That Offer a Sales Tax Break
Below is a breakdown of upcoming sales tax holidays:
- Arkansas: August 3-4
- Connecticut: August 18-24
- Florida: August 2-6
- Iowa: August 2-3
- Maryland: August 11-17
- Massachusetts: August 17-18
- Mississippi: August 30-September 1
- Missouri: August 2-4
- New Mexico: August 2-4
- Ohio: August 2-4
- Oklahoma: August 2-4
- South Carolina: August 2-4
- Texas: August 9-11
- Virginia: August 2-4
“The sales tax holiday applies to Main Street as well as the mall,” says Ben Homeyer, NFIB’s South Carolina State Director. “Our hope is that people will use this opportunity to support their communities by shopping small.”