(The Center Square) – Iowa’s annual sales tax holiday will return about $5 million to Iowa taxpayers, according to information from the Department of Revenue.
Residents can forgo sales taxes on clothing and shoes that cost less than $100 from midnight Friday through Saturday. Sunday is not included in the weekend, according to the DOR.
Watches, umbrellas and other non-wearable items are not included, the DOR said on its website.
Iowa is one of 18 states offering a sales tax holiday in 2023, according to a report from the Tax Foundation. The tax-free offerings differ from state to state. Tennessee has a weekend where guns and gun safety devices are exempt from taxes, followed by a weekend that removes sales taxes from clothing, school supplies and computers less than $1,500.
Alabama has two tax-free weekends. One held in February covers generators and weather preparedness supplies. A second one exempts school supplies, books, computers and clothing when students return to school.
Tax-free weekends are popular but are inefficient and ineffective, according to Manish Bhatt, the author of the Tax Foundation’s analysis.
“In the end, sales tax holidays are political gimmicks that distract from genuine, permanent tax relief,’ Bhatt said. “If a state must offer a “holiday” from its tax system, it is an implicit recognition that the tax system is uncompetitive. Policymakers should reduce the sales tax rate year-round, rather than relying on politically popular but economically inefficient and ineffective tax holidays.”
Iowa has the 29th highest sales tax rate in the country at 6.93%, according to the Tax Foundation.
