Is back-to-school shopping a bit overwhelming this year? Iowa’s sales tax holiday is here to provide some relief.
For Nebraskans looking to cross the Missouri River and shop in Council Bluffs, that means a 7 percent savings when considering Omaha’s sales tax rate. (Council Bluffs’ also is 7 percent.)
The annual holiday is held the first Friday and Saturday in August, when everyday clothing and footwear items individually priced under $100 are exempt from sales tax. It does not include Sunday.
All businesses are required to participate.
Each item priced under $100 will be exempt from sales tax, regardless of how many items are sold in one transaction.
So, what’s exempt?
Iowa’s definition of “clothing” means any article of apparel or typical footwear. Examples: clothes; shoes; undergarments, like socks, underwear and bras; baby clothes, receiving blankets and diapers; scarves and gloves; and swimwear.
Items that will not be exempt from sales tax include backpacks, watches, jewelry, umbrellas and sporting equipment. Some tax holidays include school supplies such as pencils and notebooks, but Iowa’s does not.
For a full list, see tax.iowa.gov.
When is it?
The holiday begins at 12:01 Friday morning and runs through midnight Saturday.
What about Nebraska?
Nebraska doesn’t have a tax holiday, but Nebraska lawmakers have considered it. In 2009, it was estimated an August tax holiday on clothing, school supplies and other items would cost the state $10 million to $12 million in lost tax revenue.
Also, the Nebraska Department of Revenue has said Nebraskans still owe sales tax on the goods they purchase in Iowa but use in Nebraska when filing annual taxes. People who buy items tax-free in other states are supposed to list those items and pay sales tax come tax time on their Nebraska taxes.