Sales tax glossary
What is a sales tax holiday?
A sales tax holiday is a limited period, set by a state, when certain items can be bought without sales tax or at a reduced rate. Holidays often cover back-to-school items, clothing, energy-efficient appliances or emergency supplies, usually with a price cap per item.
Example
During a hypothetical back-to-school holiday, clothing under a set price per item is tax-free for one weekend. Retailers in that state stop charging tax on qualifying items for those days only.
Why it matters for sellers
Retailers must update their rules for each holiday's dates, item list and price caps. Charging tax on exempt items can mean refunds, and missing the end date means undercollecting. Holidays change from year to year, so check each state's announcement.
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Related terms
This definition is general information, not tax or legal advice. Rules vary by jurisdiction and change over time.
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