Reminder: Sales Tax Holiday August 5th & 6th


July 15th, 2011 by Ric Hanson

On August 5-6, no Iowa or local sales tax will be charged on clothing and footwear priced below $100.  A family that spends $500 on clothing during the back-to-school season could save $30 or more in sales tax if they make their purchases on those days.

The exemption applies to “any article of wearing apparel and typical footwear intended to be worn on or about the human body.”  Some items are NOT exempt from sales tax, including: watches, jewelry, umbrellas, and sporting equipment (such as skis, roller blades, or swim fins).

Does the sales tax holiday mean that you should buy all your fall clothing on that weekend?  “Not necessarily,” says Mary Beth Kaufman, ISU Extension Family Finance Specialist.  “The sales tax holiday is a good deal IF you buy items that you would normally buy, and IF you get them at a good price.”

Kaufman adds that the tax holiday can backfire on families if they go overboard.  “When families use the tax holiday to buy items they would never normally buy, then it can create problems.  Likewise, when people use credit cards to buy more than they can pay for now, and then pay interest for more than 2 or 3 months, the cost of the interest will exceed the savings provided by the tax holiday.”

To take full advantage of the August 5&6 tax holiday, Kaufman offers the following suggestions:

  • Review family members’ clothing needs in advance.  Identify what they already have that fits and is in good condition, and make a list of items that are needed.
  • If possible, know in advance what sizes are right for each person.  This will make shopping easier, especially if stores are busy.
  • Keep receipts for all clothing purchases during July and August.  That’s always important, but especially so during these months.  Any time you return an item, the store will need to know whether you paid sales tax on it.
  • Plan to have funds available by saving between now and that weekend.  Delay or cancel other unnecessary purchases so you’ll have the money you need for clothing purchases.

For more information on the Iowa Sales Tax Holiday,  see the website:

For more ideas and details about planning for back-to-school spending, contact the _Cass_ County Extension Service (712-243-1132) for a planning guide.