Education

Tax-free holiday comes at peak of back-to-school shopping season

Clothing, shoes tax-free this Friday, Saturday

Businesses in Iowa won’t collect sales tax on clothing and footwear costing less than $100 during the annual holiday, which takes place on the first Friday and Saturday of August. (Bloomberg)
Businesses in Iowa won’t collect sales tax on clothing and footwear costing less than $100 during the annual holiday, which takes place on the first Friday and Saturday of August. (Bloomberg)
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Parents looking for back-to-school deals — and any other frugal shoppers — can save Friday and Saturday during Iowa’s annual tax-free holiday.

Businesses in Iowa won’t collect sales tax on clothing and footwear costing less than $100 during the annual holiday, which takes place on the first Friday and Saturday of August.

That falls during prime back-to-school shopping season — when shoppers in Iowa and other Midwestern states plan to spend $2.2 billion in the first-half of August, according to an annual Deloitte report.

Most students in Iowa return to school Aug. 23.

Overall, Americans are expected to spend the most between Aug. 1 and 14 — $9.9 billion — on their way to a grand total of $27.6 billion on school items.

Most spending will take place in mass merchant stores, such as Target and Walmart, according to the Deloitte study.

All businesses in Iowa that are open Friday and Saturday are required to participate in the state’s tax-free holiday.

Local-option sales tax also are waived on those days.

As for what qualifies as a tax-free good, the Iowa Department of Revenue defines clothing as any article of apparel or typical footwear. This means items such as watches, jewelry and some athletic wear don’t qualify.

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More than 100 items will be tax-free, according to the Department of Revenue, including diapers, baby clothes, hats, costumes, work and school uniforms, martial arts attire, prom dresses, scout uniforms, jeans, shirts, skirts and sneakers.

On buy one, get one deals, each article must cost less than $100 individually to qualify.

Articles that are discounted to cost less than $100 will be tax-free as well.

While most back-to-school shopping lists don’t include clothing or footwear, clothing is the biggest cost for most parents on back-to-school shopping trips, according to a RetailMeNot survey out this week.

On average, parents said they plan to spend $189 on clothing.

The back-to-school shopping season is ripe for overspending, especially on clothing.

According to an analysis from NerdWallet, nine in 10 parents admitted to overspending on a shopping trip for their children, with most reporting they splurged on clothing.

Clothing prices typically drop after the back-to-school rush, according to NerdWallet, so patience can be a money-saver — as will Friday and Saturday’s tax-free period.

l Comments: (319) 398-8330; molly.duffy@thegazette.com

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