Connecticut’s 25th annual sales tax-free week — a holiday designed for shoppers to buy clothing and footwear without paying sales tax — is in full swing.
Lawmakers first enacted a sales tax-free week in 2000. During the week, most clothing and footwear that costs under $100 is exempt from Connecticut’s standard 6.35% sales tax.
The exemption applies to each individual item sold, not the total amount spent. A shopper’s bill could be hundreds of dollars, but each item they purchase that costs under $100 wouldn’t be subject to sales tax. The cutoff used to be $300; however, Connecticut lawmakers changed it to $100 in 2015.
That applies to the cost of an item after all discounts have been applied to it — including coupons, rebates and any sales a retailer is running. If a store is offering a “buy-one-get-one-free” deal, the cost of two items cannot be averaged to qualify both for the exemption.
Here’s what to know about shopping this week.
When does it run and where can I shop?
Sales tax-free week began on Sunday and runs through Saturday, Aug. 24.
The holiday is held in late summer each year to coincide with when parents are typically buying new clothing and footwear for their children ahead of back-to-school season.
Purchases made at either a brick-and-mortar store in Connecticut or an online retailer are eligible for the exemption.
Full payment for an online purchase must be processed during sales fax-free week for the exemption to apply, regardless of when the item is delivered. Shipping and delivery charges on qualifying items are not taxed.
Which items are eligible?
Traditional day-to-day clothing items, footwear and exercise gear qualify for the exemption. Examples include golf shirts, blouses, dresses, jeans, sweat suits, sneakers, boat shoes and socks.
Accessories like ties, gloves, arm warmers and slippers are included too, as are employee uniforms for professions like policing, firefighting and nursing.
Ineligible items are largely those used for specific athletic activities — like goggles, ice skates, ski pants and wetsuits — as well as accessories like jewelry, barrettes, roller skates and shin guards.
Connecticut’s Department of Revenue Services offers a full list of eligible and ineligible item examples.
Who benefits from the sales-tax-free week?
DRS officials estimate consumers will save $2 million during this holiday. But between 2016 and 2019, shoppers benefitted by more than $4 million per holiday, according to estimates from nonpartisan analysts.
But other big beneficiaries of the promotion are Connecticut’s stores, some of which secure a huge chunk of their annual profits in mid-August.
“When [customers] are out and shopping and doing stuff, there is some dynamic effect that takes place,” Tim Phelan, president of the Connecticut Retail Merchants Association, told The Connecticut Mirror just prior to the 2023 holiday. “It’s part of the retail marketing schedule.”
“When you shop locally, more of your hard-earned dollars stay within the community,” Andy Markowski, state director of the National Federation of Independent Businesses, said this week. “Main Street is the backbone of our economy, creating good-paying jobs and supporting charitable organizations that keep our communities thriving. We hope that consumers will turn to local small businesses for all their shopping needs during this sales tax holiday.”
But the holiday also has its critics.
The Institute on Taxation and Economic Policy, a Washington, D.C.-based progressive policy group, issued analyses this year and in 2023 that these holidays — offered in 18 other states besides Connecticut — are too temporary to provide meaningful relief.
Given Connecticut’s standard 6.35% sales tax rate, consumers will save $6.35 for every $100 they spend — provided each individual clothing or footwear item purchased costs less than $100. For example, a family spending $300 would save $19.05 thanks to the holiday.
By comparison, Gov. Ned Lamont and the General Assembly in 2023 ordered the first state income tax rate reduction since the mid-1990s, boosted a tax credit for the working poor and expanded exemptions for pension and annuity earnings. These changes will cost the state close to $500 million annually, but low- and middle-income households each are expected to benefit between $200 and $400 per year.
ITEP also noted that consumers who receive the top benefit from these sales tax holidays are those who can afford to spend the most.
“Wealthier taxpayers are often best positioned to benefit from a temporary exemption since they have more flexibility to shift the timing of their purchases to take advantage of the tax break — an option that isn’t available to families living paycheck to paycheck,” the institute wrote in its latest analysis.