Ohio House Passes Bill Creating Sales Tax Holiday For Back-to-School Purchases

2016-05-16T10:30:55+00:00

SB 264 exempts purchases from sales tax during weekend in August

On April 27, 2016, the Ohio House passed Senate Bill 264, which designates the first weekend in August 2016 as a sales tax holiday for the purposes of back-to-school shopping. The legislation creates a three-day period in which certain school supplies are exempt from both state and county sales tax. Senate Bill 264 allows clothing up to $75 per item, and school supplies and instructional materials up to $20 per item, to qualify for the sales tax exemption. The intention of the sales tax holiday is to provide families a tax break on back-to-school shopping, while also stimulating economic activity for local businesses.

The Ohio House Finance Committee heard testimony on SB 264, and the Finance Committee Chairman, Ryan Smith (R-Bidwell), says this sales tax holiday will have a positive impact on Ohio communities like the ones he represents. “Back-to-school shopping can be a costly event for families and I am thankful that the House has voted to continue the sales tax holiday,” said Smith. “Not only will this bill stretch Ohioans’ dollars farther, but it will also be a much-needed boost for businesses. This really is a win-win for consumers and retailers.”

In the previous General Assembly, the legislature passed similar legislation to create a one-time sales tax holiday in 2014 as a way to explore the potential impact. According to the University of Cincinnati’s Economic Center, the sales total for that weekend was 6.48 percent higher than anticipated and led to $4.7 million in additional revenue for the state. The study also showed an increase of sales near Ohio’s borders, indicating that people from neighboring states came to Ohio to do their back-to-school shopping and take advantage of the sales tax exemption.

The success of the sales tax holiday in 2015 has led the legislature to reauthorize the back-to-school sales tax holiday for the first weekend of August. Provided that Governor Kasich signs the legislation, the bill will take effect in time for the sales tax holiday to take place from August 5-7 of this year. Senate Bill 264 was sponsored by State Senator Kevin Bacon (R-Minerva Park) and passed the Ohio House with a vote of 94-1. The bill now goes to Governor Kasich for his signature.

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About the Author(s)

Shane is a member of Hill, Barth & King's (HBK) Tax Advisory Group. He has nearly a decade of experience with State and Local Tax (SALT) consulting, controversy and compliance services. Shane is one the most experienced SALT consultants in the Northeastern United States having worked at Big 4 accounting firms and performed services to Fortune 500 companies in the Greater New York City, Philadelphia and Pittsburgh areas. As a member of HBK's Tax Advisory Group, he frequently teaches tax related training courses both internally for the firm and externally for clients and the public. Shane is an avid supporter of the United States Military and veteran-related charities in the Greater Philadelphia area.

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