(The Center Square) – Missouri’s sales tax and all local sales taxes in all Missouri cities, counties and special tax districts will be waived this weekend during the annual back-to-school sales tax holiday.
The holiday begins at 12:01 a.m. on Friday. It runs through midnight on Sunday, Aug. 6. School supplies, computers, clothing and other qualifying items can be purchased free of any state or local tax anywhere in Missouri.
In past years, hundreds of cities, counties and special tax districts could opt out of the tax holiday. The exceptions left many consumers frustrated when they discovered they still had to pay local taxes. Many consumers struggled to find information on where they could shop to get the largest tax exemption. Shoppers might have saved money by not paying the 4.225% Missouri sales tax, but local sales taxes often added as much as an additional 6% in some areas.
But Senate Bill 153, a 205-page bill passed by the legislature and signed into law in 2021, stopped the ability for local taxing authorities to exempt themselves during the first weekend in August. The legislation was best known for implementing the “Wayfair tax.” The law enabled collection of sales and use taxes from businesses not physically located in Missouri. A 2018 U.S. Supreme Court decision in South Dakota vs. Wayfair, Inc. allowed states to college sales taxes from online sales.
The increase in taxes from online sales far outweighed the loss from the sales tax holiday weekend. The bill’s fiscal note stated the Missouri Department of Revenue collected $677,463 in 2018 for jurisdictions opting out of the holiday; $432,273 in 2019 and $287,294 in 2020.
“Sales tax holidays have been and always will be dubious tools for promoting reasonable public policy objectives – they simply shift consumer spending patterns instead of changing them and are often used to promote illusory economic development benefits,” Patrick Ishmael, director of government accountability for the Show-Me Institute, wrote in a blog post last week. “As with tax credits on income taxes and tax abatements on property taxes, carving up the sales tax base with ‘tax holidays’ can have similarly unintended consequences, even if the policy is good politics and good intentioned.”
Research by the Tax Foundation found sales tax holidays don’t promote economic growth or significantly increase consumer purchases but instead shift the timing of purchases.
Clothing that doesn’t have a taxable value of more than $100 will be exempt. Eligible items include any article of apparel, including footwear and disposable diapers for infants or adults. School supplies, not exceeding $50 per purchase, that are used in a standard classroom for educational purposes are exempt from taxes.
Personal computers under $1,500 and computer peripheral devices under $1,500 also are tax free this weekend.
