July 2020 sales tax holidays

Two states are providing sales tax holidays in July 2020: Mississippi and Tennessee. Both temporarily eliminate sales tax on qualifying clothing and school supplies, and both start July 31. Yet while Tennessee’s sales tax holiday ends at 11:59 p.m. on August 2, Mississippi’s concludes at midnight on August 1.

There are other similarities and differences. The tax-free periods in both states apply to state and local sales, but overall, Tennessee’s tax-free period is much broader than its neighbor’s. For example:

• In Mississippi, the price threshold for clothing and school supplies is less than $100
• In Tennessee, the price threshold for clothing and school supplies is $200 or less

The Mississippi Department of Revenue has published an all-inclusive list of exempt school supplies. By contrast, the Tennessee Department of Revenue explains the exemption applies to “school and art supplies with a purchase price of $200 or less per item.” It gives some examples but doesn’t have an “all-inclusive list” like Mississippi.

Perhaps the biggest difference is that qualifying electronic devices priced $3,000 or less qualify for the tax-free period in Tennessee. Mississippi provides no exemption for computers, electronic readers, smartphones, tablets, televisions, or video game consoles.

Tennessee increased the price thresholds for the 2020 sales tax holiday. In past years, the thresholds were $100 or less for clothing and footwear and $1,500 or less for qualifying electronic devices.

The Volunteer State is also offering a second tax-free weekend for restaurants sales of food and drink. It will run August 7 through August 9.

The additional tax-free period and higher threshold are in response to the coronavirus pandemic. Tennessee Governor Bill Lee explained in a press release: “The COVID-19 pandemic has caused immense economic strain on Tennessee families. These sales tax holidays will allow them to keep more of their hard-earned money and support Tennessee businesses.”

Learn more about 2020 sales tax holidays, and how automating sales tax collection with Avalara AvaTax can help make sales tax holidays more manageable.