How to save on back-to-school shopping with tax-free weekends

There’s no disputing that the cost of consumer goods has soared. Even though the U.S. inflation rate is down for the 12 months ending in June 2024, prices are still slow to fall in many sectors. Since what was once economical may now be expensive, the prospect of shopping for your child’s school items could be daunting.

And sales taxes are an extra burden.

In states like Louisiana, the combined state and local tax rate adds up to over 9.5 percent according to the Tax Foundation, which makes the cost of buying school supplies that much more of a financial burden on parents.

Who pays sales tax?

As a consumer, you likely pay a variety of taxes throughout the year and for various events, including income taxes on the money you earn and property taxes on your home. Another common charge is sales tax, which you’re charged when you buy many physical goods. The money generated from sales tax goes into state coffers to pay for expenses such as infrastructure, fire and police departments and public schools.

There are currently only five states in the country that don’t add this tax to purchases: Alaska (which does allow municipalities to assess local sales taxes), Delaware, Montana, New Hampshire and Oregon. If you live in one of these states, you enjoy a sales-tax-free holiday all year round. If you don’t, however, you’ll pay this charge on eligible items every time you visit the cash register or hit the “buy” button online.

Tax-free weekends, strategic shopping can add up to savings

One way to take the edge off this back-to-school season is to wait for your state’s tax-free weekend to make your purchases. On these weekends in participating states, you can purchase select items or categories of items, such as clothing or electronics, without owing sales tax, making it a good time to set kids up with the things they need for school.

But it’s not the only way to save.

To increase your savings even further, check for unused gift cards — 47 percent of U.S. According to a Bankrate’s 2023 Gift Card Survey, most adults have at least one unused gift card, gift voucher, or store credit. To maximize your savings, consider charging your purchases to a credit card that offers rewards. Alternatively, you can shop strategically, like Angela Davis, a mother of two from Maryland, who plans her back-to-school shopping throughout the summer by taking advantage of sales and even driving to tax-free Delaware for better deals.

While Maryland’s 6 percent sales tax may not be a major concern for Davis, it’s essential to be aware of the sales tax rates in your state. Some states have higher or lower rates, with California having the highest at 7.25 percent. Checking for opportunities to get a sales tax break, especially during tax-free holidays, can make your purchases more affordable.

For example, states like Connecticut and Florida offer tax-free holidays for back-to-school items, allowing you to save on clothing, footwear, school supplies, and computers. By taking advantage of these tax-free periods, you can lower your overall expenses on necessary items for your children’s education.

To further maximize your savings, consider using a rewards credit card for your back-to-school purchases. By spending towards a welcome bonus or using a cash back card that rewards back-to-school purchases, you can earn additional rewards and save money on your overall expenses. Make sure to pay off your balance in full to avoid paying interest and fully benefit from these savings opportunities. When it comes to making back-to-school purchases, there are several credit card options that can help you save money and earn rewards. For example, the Blue Cash Everyday® from American Express offers 3 percent cash back at U.S. supermarkets, U.S. gas stations, and U.S. online retail purchases. The Bank of America Customized Cash Rewards card lets you earn 3 percent back on purchases in the bonus category of your choice, such as gas, online shopping, dining, travel, drugstores, or home improvement.

If you’re looking to make larger purchases but don’t have all the cash upfront, you may want to consider using a credit card with a 0% APR offer. This can help you avoid interest charges while you pay off your balance over the introductory period. For example, the Wells Fargo Active Cash® Card offers a 0% intro APR on purchases for 15 months, along with a $200 cash rewards bonus after spending $500 in the first three months.

By strategically using rewards cards, taking advantage of sales tax-free days, and staying within your budget, you can maximize your savings on back-to-school shopping. Just remember to pay off your credit card balance in full each month to avoid interest charges and make the most of your rewards.