How much do Florida sales tax holidays cost retailers? Wacky Tax Wednesday

Retailers required to collect and remit Florida sales tax may have to cough up so Florida consumers can purchase a raft of products tax free during a slew of overlapping Florida sales tax holidays in 2023. 

Tax-free weekends in all states tend to create a compliance burden for affected retailers. Unless a retailer uses an automated sales tax solution that calculates and collects sales tax for them, they’re on the hook for updating their point-of-sale systems to account for every temporary sales tax rule. 

This takes time, especially when a sales tax holiday applies to a wide variety of products with differing price caps. Unfortunately, businesses aren’t always given much time to prepare. Florida’s 2023 disaster sales tax holiday started on May 27, just one day after Governor Ron DeSantis signed the Florida sales tax holiday bill into law.

One day.

When a state offers overlapping sales tax holidays, as Florida has taken to doing, compliance becomes even more complicated because:

• Different sales tax holidays exempt different products 
  
• Different sales tax holidays start and end at different times
  
• One product may qualify for more than one sales tax holiday 
  
• One sales tax holiday can have dozens of different price caps
  

Most state sales tax holidays exempt specific products rather than all products, and most states set price caps. There are exceptions: The annual Massachusetts sales tax holiday exempts all tangible personal property priced $2,500 or less; the annual South Carolina sales tax holiday has no price restrictions on qualifying items. But for the most part, temporary exemptions apply to specific products under a specified price.

Retailers that sell a wide variety of items in states with more than one sales tax holiday have to keep track of which products qualify for what tax-free period. This is a big job in Florida, which has eight different sales tax holidays in 2023. Eight.

Some of the 2023 Florida sales tax holidays actually started in 2022, and some will last well into 2024. Most run sometime between May and September, for a few days or a few months.

Dates for the 2023 Florida sales tax holidays are as follows:

• July 1, 2022–June 30, 2023 (children’s diapers; baby clothes and footwear)
  
• July 1, 2022–June 30, 2024 (impact-resistant windows, doors, and garage doors)
  
• May 27–June 9, 2023; and August 26–September 8, 2023 (disaster-preparedness supplies sales tax holiday)
  
• May 29–September 4, 2023 (Freedom Summer sales tax holiday)
  
• July 24–August 6, 2023, and January 1–14, 2024 (back-to-school sales tax holidays)
  
• September 2–8, 2023 (tool time sales tax holiday)
  
• July 1, 2022–June 30, 2023; and July 1, 2023–June 30, 2024 (Energy Star appliance sales tax holiday)
  
• July 1, 2023–June 30, 2024 (gas ranges and cooktops)
  

Businesses registered to collect and remit sales tax in numerous states often have to juggle multiple sales tax holidays. For example, during the 2023 summer back-to-school sales tax holiday season, a seller may be required to exempt school supplies costing $50 or less from Florida sales tax July 24 through August 6, and all eligible school supplies (i.e., no price restriction) from Arkansas sales tax on August 5 and 6.

Florida’s recent enthusiasm for sales tax holidays compounds that complexity. Any business that sells coolers and is required to collect and remit Florida sales tax has to figure out how to account for the fact that a cooler priced $60 or less qualifies for the disaster preparedness sales tax holiday that runs May 27–June 9, 2023, and again August 26–September 8, 2023, while a cooler priced $75 or less qualifies for the Summer Freedom sales tax holiday that runs May 29–September 4, 2023.

As we’ve said, it’s common for states to set price caps for sales tax holidays. Many states’ back-to-school sales tax holidays exempt clothing priced $100 or less but not clothing that costs more than $100.

Florida’s Freedom Summer sales tax holiday turns price caps up to 11. The temporary Florida sales tax exemption applies to a profusion of price restrictions ranging from $5 to $500, like so:

• Boating and water supplies

  • Goggles, snorkels, and swimming masks priced $25 or less

  • Inflatable chairs, pool floats, pool toys, and recreational pool tubes priced $35 or less

  • Safety flares priced $50 or less

  • Coolers, life jackets, oars, and paddles priced $75 or less

  • Kneeboards, wakeboards, water skis, and recreational inflatable water floats or tubes capable of being towed priced $150 or less

  • Paddleboards and surfboards priced $300 or less

  • Canoes and kayaks priced $500 or less

• Camping supplies

  • Camping lanterns and flashlights priced $30 or less

  • Camping stoves, collapsible camping chairs, portable hammocks, and sleeping bags priced $50 or less

  • Tents priced $200 or less

• Fishing supplies

  • Bait or fishing tackle (sold individually) priced $5 or less

  • Bait or fishing tackle items (sold together) priced $10 or less

  • Tackle bags or tackle boxes priced $30 or less

  • Rods and reels (sold individually) priced $75 or less

  • Rods and reels (sold as a set) priced $150 or less

  • Supplies used for commercial fishing purposes don’t qualify for the sales tax holiday

• General outdoor supplies

  • Sunblock, sunscreen, or insect repellant priced $15 or less

  • Water bottles priced $30 or less

  • Bicycle helmets priced $50 or less (bike helmets for youth are always sales tax exempt)

  • Hydration packs priced $50 or less

  • Sunglasses priced $100 or less (prescription eyeglasses are always sales tax exempt)

  • Binoculars priced $200 or less

  • Outdoor gas or charcoal grills priced $250 or less

  • Bicycles priced $500 or less

• Residential pool supplies 

  • Covers, filters, lights, nets, and residential pool and spa replacement parts priced $100 or less 

  • Residential pool and spa chemicals (purchased by an individual) priced $150 or less

• Children’s athletic equipment (for use by a child 12 years of age or younger) priced $100 or less

• Toys for children 12 years of age or younger priced $75 or less

And again, all the above products are for just one of the eight Florida sales tax holidays offered in 2023. 

But we should be thankful, really. During the first Freedom sales tax holiday in 2021, the Florida sales tax exemption applied to only a portion of the sales price of qualifying items: the first $5 of the price of bait or fishing tackle, the first $50 of the price of camping stoves, etc. This partial Florida sales tax exemption was offered again during the 2022 Freedom Week. It must have been a compliance nightmare for businesses trying to manage sales tax manually. 

Fortunately, for 2023, Florida discontinued the partial sales tax exemptions in favor of the price caps preferred by most other states. 

Sales tax holidays can save consumers tax dollars, so they tend to be politically popular. However, they may not always actually save consumers money. According to the Tax Foundation, a 2003 study by researchers at the University of West Florida found that retailers absorbed up to 20% of the benefit of a Florida sales tax holiday by raising prices on qualifying goods. The Tax Foundation generally considers sales tax holidays to be “bad policy.” 

Furthermore, sales tax holidays make more work for in-state retailers and out-of-state sellers that have economic nexus with Florida. That Florida Freedom Summer sales tax holiday? It’s not free for affected businesses.

Automating sales tax calculation, collection, and remittance helps lessen the burden of sales tax compliance during sales tax holidays and the rest of the year. Learn more about automating sales tax compliance.

See a list of 2023 sales tax holidays in all states.