Plan for back-to-school shopping during Iowa sales tax-free weekend

Consumers can save some money for back-to-school expenses despite inflation by planning for Iowa’s sales tax-free weekend, Aug. 2-3.

This once-a-year event the first Friday and Saturday of August provides an opportunity to expand student wardrobes without paying state and local sales tax. This means consumers will save at least $6 on every $100 they spend for clothing and shoes.

“With the average family spending $864 on back-to-school items, that’s almost as much as people spend for the winter holidays,” says Carol Ehlers, a human sciences specialist in family wellbeing with Iowa State University Extension and Outreach. “Many households set aside money year-round to help cover their holiday expenses and the same should be for back-to-school purchases. This should not be a surprise and needs a spending plan.”

Iowa’s annual sales tax holiday kicks off at 12:01 a.m. Friday, Aug. 2 and runs through midnight Saturday, Aug. 3. Although the two-day event falls during the back-to-school shopping season, the exemption applies only to certain apparel and footwear priced less than $100. For a full list of Iowa’s tax-free items for the holiday go to the Iowa Department of Revenue’s website. Exemptions do not apply to the prices of an item selling for over $100.

Waived on such items are the state sales tax of 6% and any local option sales tax. Many municipalities have a separate 1% sales tax for the city and school district. During the sales tax holiday, a shopper could save between 6%-7% depending on location, or approximately $7 on an item that costs less than $100.

The tax-exempt savings applies only to:

• Clothing under $100
• Shoes under $100

Examples of a few items exempt from Iowa’s sales tax-free weekend include:

• Jewelry
• Watches and watchbands
• Umbrellas
• Sports equipment (such as skis, swim fins, roller blades and skates, as well as clothing or footwear designed specifically for athletic use)

Smart shopping tips for Iowa’s sales tax-free weekend

“Back-to-school shopping can be a great beginning to an exciting new school year for students. With good planning, families can purchase what they need without breaking the bank,” Ehlers said. “Take full advantage of Iowa’s tax-free weekend by applying the following tips.”

1. Plan ahead

Plan for major clothing and shoe purchases before you go shopping during Iowa’s sales tax-free weekend event.

“Giving each student a chance to inventory what they can start school with and share their expectations, allows family members to better plan,” said Ehlers. “Everyone may not get exactly what they want but talking about it in advance will help set a positive tone.”

Ehlers also suggests discussing what your family can realistically afford. Parents should decide how much the family can set aside for school shopping. Consider using the tax-free holiday time to purchase not just what you need right now, but what your children will need over the next several months. She also recommends avoiding the temptation to use credit cards unless you are able to pay them off in full each month.

2. Set a budget and stick to it

Be careful not to overspend just because the tax-free weekend is occurring. According to the National Retail Federation, the average family with students in kindergarten through 12th grade spent $890 in 2023 on electronics, apparel and other school items. Review what you spent last year for clothing and shoes to create your own spending plan.

“Let students make decisions within the amount of money they are allotted. If they have more ‘wants’ than the family budget can afford, they may need to use some of their own money or earn money from odd jobs to make up the difference,” explained Ehlers. “Allowing students to be a part of these decisions gives them a chance to learn to manage money wisely.”

3. Compare prices

Use the sales circulars from your newspaper to compare prices on the items you wish to buy. Visit websites of several stores where you usually shop. If you tend to buy your kids’ jeans or sneakers at national retail outlets, visit their websites during tax-free weekend to find out which store is offering the better deal.

“Some stores may be willing to match the price offered in a competitor’s advertisement. Be sure to keep your receipts in case you need to return something or until the warranty expires for more expensive items,” Ehlers said.

4. Know the rules and expect a busy shopping weekend

The Iowa Legislature approved the tax holiday in 2000 to help boost the economy and give consumers a break. Previous tax-free holidays have shown to pump up sales for everyone from big-box retailers to mom-and-pop shops. Some merchants report double-digit increases in sales, compared to a typical August weekend.

Stores have been stocking back-to-school items for nearly a month, but this tax-exempt weekend will be the busiest. Know the rules to make the most of your purchase decisions, Ehlers stressed.

• No sales tax, including local option sales tax, will be collected on sales of an article of clothing or footwear having a selling price less than $100.
• The exemption does not apply in any way to the price of an item selling for $100 or more.
• The exemption applies to each article priced under $100 regardless of how many items are sold on the same invoice to a customer.
• For more information and a complete list of what’s included in the tax holiday, visit the state’s website at https://tax.iowa.gov/iowas-annual-sales-tax-holiday.

PHOTO: Woman shopping for shoes for her son in a department store (iStock – Juanmonino)