Arkansas sales tax holiday to begin Aug. 6

Editor’s note: Roby Brock, with our content partner Talk Business, wrote this report. He can be reached at [email protected]

Arkansans may begin on Aug. 6 to take advantage of a sales tax exemption on back-to-school items. If you’re an early planner, you’re in luck: the details have already been worked out.

Arkansas Department of Finance and Administration officials have been working feverishly to set the guidelines for the sales tax holiday, which was approved by legislators in the recent session.

The sales tax exemption for clothing and footwear will apply to items valued up to $100 and there will be a $50 limit for clothing accessories. Back-to-school supplies from crayons to calculators are also included as is sporting equipment, such as shin guards, shoulder pads and ski boots.

The new DF&A rules and regulations will answer questions for both shoppers and retailers. Questions include:

• Suppose you buy 3 shirts worth $150. How much of that sale is exempt?
All of it if each shirt costs less than $100. As long as the individual item stays below the dollar limit threshold, you get the tax break.

• What if I have store coupon or discount?
You can use them to get below the dollar threshold in order to qualify for the sales tax exemption. However, manufacturer’s discounts cannot be used to meet the holiday exemption.

• Can I separate qualifying items, like a pair of shoes, to get under the $100 tax relief limit?
No can do. Items normally sold as a single unit like shoes or a suit can’t be separated to get the tax break.

How about delivery charges, layaway, or rain checks? What about a back-to-school computer? Can I get a discount on the first $100 towards that purchase? As a retailer, do I have to participate in the tax holiday?

All of these questions have been compiled in two handy-dandy Frequently Asked Question (FAQ) sheets by DF&A officials. For consumers, you can access the FAQ sheet at this link. Retailers can link here to review.

The tax exemption not only includes state sales taxes, but it also includes local sales taxes, too. Follow this link to access all of the items included in the tax-free holiday.

Act 757, carried by freshman Rep. Matthew Shepherd, R-El Dorado, created the state sales tax holiday for clothing, clothing accessories, school supplies and school instructional materials on the first weekend in August, beginning this year.

Twenty states have some form of a back-to-school sales tax exemption weekend. Arkansas finance officials estimate that the state will lose about $2.1 million per year in tax collections from its sales tax holiday.