Savvy shoppers: Take advantage of tax-free holiday

WASHINGTON, D.C. (7/24/07)--Shoppers, start your engines and get ready to save. Tax-free holiday weekends are just around the corner for this year's back-to-school shopping season (National Retail Federation July 17).

Families with school-age children are expected to spend about $564 on back-to-school items, up 6.9% from last year's average of $527. This year's total back-to-school spending is expected to exceed $18 billion.

If you're lucky enough to live in a state that offers a tax-free holiday, you can cut the cost of sending your kids back to school this fall. Websites en.Wikipedia.org and About.com list states that participate in tax-free holidays and include eligible items.

The tax holiday originated in Texas in 1999. Currently, a dozen states and Washington, D.C., offer the holiday. It generally takes place on a Friday through Saturday or Sunday in August, before school is back in session. During this special weekend, sales tax is not collected on selected items such as clothing, school supplies and even computers. Consumers can purchase an unlimited amount of items, but items subject to tax exemption might be restricted by price--for example, clothing up to $100 or personal computers up to $3,500 (Wikipedia.com).

A new item--backpacks--is on some state lists for the first time, according to the Texas Credit Union League's LoneStar Leaguer (July 18). The bill for backpacks can get pretty steep--especially if you have to purchase more than one.

Jan Garkey, Credit Union National Association's manager of adult member education, said when she lived in Iowa, her sister in Illinois would send her children to stay with Garkey for the tax-free weekend so they could take advantage of the savings. "It made a sizable difference in total back-to school costs--she has three kids," Garkey said.

Other ways to save on back-to-school shopping:

• Have kids foot part of the bill. They might actually need less if they're paying part of the bill.
• Reuse items. Maybe that three-ring binder only was used once and still looks brand new.
• Sell clothing no longer worn. You can recoup some of this year's cost by having a garage sale or working through a consignment shop to sell items old items.
• Use cash when possible. You'll be more aware of how much you're spending if you don't put everything on plastic.

For more information about teaching kids you're sending back to school about money, read "Credit/Debit Cards, Checking Accounts, Teach Teenagers to Handle Money" in Home & Family Finance Resource Center.

courtesy of cuna.org