Sales tax holidays set for July and August

Tennessee General Assembly approved two sales tax holidays for 2023. The first is the traditional Back-to-School sales tax holiday on clothing, school supplies, and computers. The second is a three-month Grocery-Tax holiday.

The Back-to-School holiday will begin at 12:01 a.m., on Friday, July 28, 2023, and ends at 11:59 p.m., on Sunday, July 30, 2023.

Clothing covered by the holiday includes general apparel that costs $100 or less per item, such as shirts, pants, socks, shoes, dresses, etc. School and art supplies with a purchase price of $100 or less per item, such as binders, backpacks, crayons, paper, pens, pencils, and rulers, and art supplies such as glazes, clay, paints, drawing pads, and artist paintbrushes are tax exempt. Computers for personal use, laptop computers, and tablets, if priced at $1,500 or less, also qualify for tax exemption. Single clothing or school supplies or items listed together as a single sale that cost over $100 are not tax-exempt. Jewelry, handbags, or sports and recreational equipment are not tax-exempt. Storage media, like flash drives and compact discs, individually purchased software, printer supplies, and household appliances are not tax-exempt.

The Grocery-Tax holiday will begin at 12:01 a.m., on Tuesday, Aug. 1, 2023, and ends at 11:59 p.m., on Tuesday, Oct. 31, 2023.

The Grocery-Tax holiday will make food and food ingredients tax-exempt. “Food and food ingredients” are defined as liquid, concentrated, solid, frozen, dried, or dehydrated substances sold to be ingested or chewed by humans and consumed for their taste or nutritional value. Food ingredients do not include alcoholic beverages, tobacco, candy, dietary supplements, and prepared food. Food and food ingredients are usually taxed at the 4 percent state sales tax plus any applicable local rate.

All dealers must properly report exempt sales made during the sales tax holiday. For the August 2023 through October 2023 reporting periods, sales should be reported as follows:

• Report all sales (taxable and non-taxable) on Page 1, Line 1 (Gross Sales) of the sales tax return.
• Report all sales of exempt food and food ingredients made during the holiday period on Schedule A, Line 10, and Schedule G – Temporary Exemptions.

The information reported on Schedule A, Line 10, is required for the State to reimburse local governments for the loss of local sales tax resulting from the tax holiday.