For over a decade, parents in North Carolina have enjoyed the “tax-free weekend,” a three-day period at the beginning of August where they could purchase school supplies minus sales tax. The weekend has not only meant savings for families, it has also meant an influx of shoppers into local stores. Thanks to recent legislation, though, it is no more. 2013 marks North Carolina’s last sales tax-free weekend.
House Bill 998, the Tax Simplification and Reduction Act of 2013, replaces the state’s progressive multi-tiered income tax—a policy that had been in place since 1921—with a flat tax. Previously, the state had three levels for income tax: a 6 percent rate for singles making up to $12,750 and couples making up to $21,250, a 7 percent rate for singles with an income between $12,750 and $60,000 and for couples making between $21,250 and $100,000, and a 7.75 percent rate for singles making over $60,000 and for couples making over $100,000 a year. Starting next year, everyone in North Carolina will pay just 5.8 percent on state income tax, with a reduction to 5.75 percent beginning in 2015.
Because of a reduction on everyone’s state income tax, the state government has decided to eliminate the state’s sales tax-free weekend. (Of course, the “reduction” for someone making $12,750 a year is a mere $25.50, while someone making $100,000 will now pay $1,950 less in state income tax, but the validity of a “flat tax” is a discussion for another time.) The state government has also done away with the Energy Star tax-free weekend, meaning the first weekend in November will be North Carolina’s last chance to purchase home appliances with a reduced sales tax.
This year’s tax-free weekend goes from August 2 to August 4, and numerous items will be exempt from state sales tax. They are:
- Clothing, footwear, and school supplies of $100 or less
- School instructional materials (e.g. textbooks) of $300 or less
- Sports equipment costing $50 or less
- Computers costing $3,500 or less, and computer supplies (printers, flash drives, etc.) costing $250 or less
According to the North Carolina Retail Merchants Association, shoppers saved a total of $14.7 million last year during the sales tax-free weekend. However, as I wrote last year, the original idea behind the August tax-free weekend was not specifically for parents to save money on school supplies; it was to keep people from going out-of-state to make purchases. The elimination of North Carolina’s tax-free weekend may cause more people to take up “border shopping.”
Georgia, for example, has a minimum state sales tax of 4 percent, lower than North Carolina’s minimum of 4.75 percent. Not only is Georgia keeping its sales tax-free holiday, it is a 4-day event. While our other three border states (South Carolina, Tennessee, and Virginia) all have higher state sales taxes, they all have a tax-free weekend at the beginning of August. Someone living on the south side of Charlotte could simply drive 10 miles to Fort Mill, South Carolina in order to purchase sales tax-free items, and they could do so by burning up just one gallon of gas! A person from Rockingham County could travel 17 miles to Martinsville, Virginia and save on sales tax while spending about 5 dollars on gas. A person in Brunswick County could do the same by traveling to North Myrtle Beach, South Carolina. It isn’t fiscally possible for all North Carolinians, but many people living near the borders—especially those whose state income tax have been “reduced” from 6 percent to 5.8 percent—could save money by taking a short drive across state lines.
Whether or not the tax-free weekend helped the state’s economy, it was symbolic to low-income families and people in low-income professions (teachers). It offered a little bit of savings at an opportune time right before the renewal of the school year. Being one of eight kids, I sure know it helped my family! I don’t exactly know what will happen after this final tax-free weekend, but I am confident many people will be frustrated. Businesses in Danville, Virginia and Fort Mill, South Carolina, however, may be looking forward to future Augusts.
He played clarinet for the Marching Tar Heels in 2005 and 2006. He also volunteered for STV, the student-run television station at UNC-Chapel Hill, in the spring of 2010. He shot video, wrote scripts, and acted for “Off the Cuff,” UNC’s longest running sketch comedy show. He has the rare distinction of having lived in a dorm all four years of his undergraduate college career. He was also on Franklin Street on the night of April 4, 2009. His future plans are to pursue a master’s degree in journalism and to one day work for the media as a sports journalist or broadcaster.
Being one of eight children, David realizes finance is an important topic to everyone, regardless of his/her knowledge of the subject. His interests are in personal finance, budgeting, and savings.
In his spare time, David enjoys watching sports and standup comedy, as well as doing crossword puzzles and writing in the first person. He also thoroughly enjoys trivia and, one day, hopes to participate on the game show Jeopardy!, where he will try to break Ken Jennings’ 74-game win streak.
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