The State of Tennessee’s Annual Sales Tax Holiday will be held the first weekend in August beginning at 12:01 a.m., Friday, August 3, and ending at 11:59 p.m., Sunday, August 5.
What is Tax Free?
- Clothing – $100 or less per item
During the tax holiday, clothing with a purchase price of $100 or less per item is exempt from sales tax. Clothing items costing more than $100 or any clothing purchased for use by a trade or business are not exempt from tax. Items that are normally sold together, such as shoes, may not be split to achieve the $100 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.
Exempt clothing is defined as “human wearing apparel for general use.” It does not include accessories such as jewelry or bags or sports and recreational equipment like baseball gloves.
Examples of tax-free clothing include: Belts, Caps, Coats, Dresses, Gloves, Hats, Hosiery, Jackets, Jeans, Neckties, Pants, Scarves, School Uniforms, Shirts, Shoes, Socks, Sneakers, Underwear.
- School & School Art Supplies – $100 or less per item
School supplies (including school art supplies) with a purchase price of $100 or less per item are exempt from sales tax. School supplies individually priced at more than $100 or items purchased for use by a trade or business are not exempt from tax. Items that are normally sold together may not be split to achieve the $100 threshold. Under these special holiday laws, there is no requirement that purchases be only for students. If an item is tax exempt, anyone may make the purchase tax-free.
School supplies are defined as items used by a student in a course of study. Specifically excluded are items such as instructional materials, including reference books, and school computer supplies (compact discs, printers, and printer ink).
Examples of tax-free school & art supplies include: Binders, Book Bags/Backpacks, Calculators, Chalk, Crayons, Erasers, Folders, Glue, Lunch Boxes, Notebooks, Paper, Pens, Pencils, Rulers, Scissors, Tape, Clay and Glazes, Paints, Paintbrushes, Sketch and Drawing Pads, Watercolors.
- Computers – $1,500 or less
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.
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 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 as 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, such as paper and ink
If you have any questions about the information above, please contact the expert listed below at PYA, (800) 270-9629.
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WE ARE REQUIRED BY IRS CIRCULAR 230 TO INFORM YOU THAT THE FOLLOWING DISCUSSION WAS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED, NOR RELIED UPON, BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING ANY PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW. THE ADVICE WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED IN THE DISCUSSION. EACH TAXPAYER SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR
