(The Center Square) – While state leaders and business groups applaud Ohio’s two-week sales tax holiday that begins Friday, a tax policy group says the annual event comes with significant downsides.
The holiday, which wipes out sales tax for nearly everything priced at $500 or less, is extended for two weeks for the first time, beginning Friday at midnight and ending at 11:50 p.m. on Aug. 14.
The exemption covers clothing, electronics, books, dine-in food, beverages and other items. Watercraft, outboard motors, motor vehicles, alcohol, tobacco, vape products and items containing marijuana are not covered.
Small businesses throughout the state hope it’s a time for shopping at local businesses in communities.
“Ohio’s sales tax holiday is always a great opportunity to shop small, but especially this year since the holiday has been extended to two weeks,” said Cameron Garczyk, National Federation of Independent Business Ohio assistant state director. “When you shop locally and dine at small businesses, you are keeping your hard-earned money in your community and strengthening the local economy. We hope Ohioans will shop small during the 2025 sales tax holiday and support small businesses.”
However, the Institute on Taxation and Economic Policy recently released a new report that says the 18 states that still have sales tax holidays will lose around $1.3 billion.
The group also says the holidays are poorly targeted and too temporary to relieve the regressive nature of sales tax, which forces low-income families to spend a greater share of their income on things subject to sales tax.
“Sales tax holidays are ineffective and gimmicky,” said Miles Trinidad, ITEP state analyst and author of the brief. “While policymakers often tout them as helping families save money for essential goods, these holidays fall far short of lessening the regressive nature of sales taxes on the low- and moderate income households who feel these taxes the most while also depriving states of revenue, being easily exploitable, and creating administrative headaches.”
Ohio’s two-week holiday is longer than any other state, except Florida, which offers the exemption during the entire month of August.
