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Save a Bundle on Back-to-School with Sales Tax Holidays

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Irea Sotero shops the day before the start of a School Sales-Tax Holiday.
When times are tough, every penny counts. That's why shoppers look forward to what has become an annual summer ritual in many states: the chance to avoid sales tax on certain purchases.

Most of the tax holidays are slated to take place in late July or during August. To get a list of tax holiday dates, check out this list from the Federation of Tax Administrators. But if your state isn't listed there, double-check with your state's Department of Revenue for possible updates.

Different States, Different Tax Breaks

Sales tax holidays were originally established in many states in order to help back-to-school shoppers cut costs on purchases for their children. As a result, many of the states giving holidays, including Arkansas, Connecticut, Florida, Iowa, Maryland, Mississippi, Oklahoma, Texas and Virginia, limit their applicability to clothing, footwear, and school supplies. Most of those also states put dollar limits on purchases, typically ranging from $75 to $100 on clothing and $20 to $100 for school supplies.

But several states go beyond those basics to include some big-ticket items that are arguably connected to school. For instance, Alabama, Georgia, Missouri, New Mexico, North Carolina, South Carolina and Tennessee have expanded their list to include computers, with maximum limits ranging from $750 to $3,500.

Still other states simply give a blanket exemption on nearly anything you can buy. In Louisiana, most purchases carrying a price tag of less than $2,500 are exempt from tax during the holiday. And although Massachusetts hasn't finalized its sales tax holiday for 2012, lawmakers are expected to pass a measure creating one this year, and last year's holiday gave shoppers an exemption on most items up to $2,500.

A few states have also started experimenting with tax-free sales in other categories. For instance, Alabama and Louisiana have offered tax holidays on hurricane-preparedness items. Several states have given holidays focusing on energy-efficient appliances.

With sales tax rates typically ranging from 4% to 7%, the savings from not having to pay sales tax aren't like winning the lottery. But for cash-strapped families, every little bit adds up.

So don't miss out -- find out when your state's tax holiday is and take advantage of it this year.

For more on taxes and family saving:

You can follow Motley Fool contributor Dan Caplinger on Twitter here.


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