Tax-Free Tennessee

This weekend is the first "tax-free" shopping weekend of 2008 in Tennessee.

In 2006, the state legislature decided to hold two "tax-free" weekends to help alleviate the sales tax burden on Tennessee's consumers. Tennessee has the highest state sales tax in the continental United States (9.25-9.75%), and the state estimates that shoppers all over the state will see a sales-tax savings of approximately $10 million over the three-day weekend. Eligible items include clothing ($100 and less per item), school and art supplies ($100 and less per item) and computers ($1500 and less per bundled package). If you want to see the list of exempt items, click here.

(Confused? Don't even get me started on the food/non-food taxable rates!)

Here's the interesting thing: The list of tax-exempt items is pretty interesting. The sales-tax holiday, from my understanding, was originally meant to relieve parents of high sales tax on school clothes and supplies each year. Because I owned a retail establishment until May of last year, I received the list of taxable and exempt items, and I found it pretty interesting. For example, in 2006, paints , clay and crayons (all conceivably school supplies) were taxable, while bridal gowns, diapers and jogging apparel were tax-exempt. Paper was exempt because it is a school supply. Last year the legislature included art supplies since both elementary and high school kids use them in classes. Bridal gowns (and jogging and aerobic clothing as well as thongs and tuxedos) are still exempt (although try to find a gown or tux under $100 these days!).

A lot of confusion reigned in my store, which was a paper arts store. Since I sold a number of exempt items (scissors, adhesives, color pencils), I could not charge tax on them even though most of the customers were going to use them for personal use. I also sold some items that were not exempt in 2006 but exempt in 2007 (clay and acrylic paints). Worse, I sold paper of all kinds - color paper and cardstock (exempt), writing paper (exempt) and scrapbook paper (who knows?). A great guy in the department of revenue finally told me just to exempt all the paper and not worry about it. PHEW!


For the past two years, I didn't really get to take advantage of the sales tax holiday, but this year, I bought something great. . . . .But, that's a story for next week!

Tomorrow: Music City Marathon