Tennessee Sales Tax Holidays
Two years in a row, the Tennessee General Assembly has approved multiple sales tax holidays for retail shoppers. The traditional sales tax holiday that covers purchases of clothing, school supplies, and computers has been approved in addition to the renewal of the additional two tax-free days that were introduced in 2021. The tax-free holiday is again extended to food and food ingredient purchases as well as gun safety purchases.
Two of the sales tax holidays will fall in the traditional late July/early August time frames. The traditional sales tax holiday will begin Friday, July 29th, and end at 11:59 p.m. Sunday, July 31st. The food sales tax holiday was an entire week in 2021, but in 2022 the Tennessee General Assembly expanded the holiday to include the entire month of August. Throughout August 2022, food and food ingredients will be sales tax exempt. The third holiday will run an entire year beginning on July 1st, 2022, and ending on June 30th, 2023, and will cover gun safes and gun safety products.
While these holidays cover broad categories of products, it is important to be aware of the new specific rules for each holiday to determine the tax-exempt status of your purchases.
Food Sales Tax Holiday
The guidelines for what qualify as food and food ingredients are outlined in Notice #22-10 by the Tennessee Department of Revenue. To summarize, food and food ingredients do NOT include alcoholic beverages, tobacco, candy, or dietary supplements, but DO include most foods sold by grocery stores. Prepared foods were tax exempt for the 2021 sales tax holiday but are not exempt for the 2022 holiday.
The big change this year is the removal of prepared foods for the sales tax holiday. Many people in the prior year used this week to go out to eat more and support local restaurants, but consumers can still take advantage of this sales tax holiday. Although the prepared foods were removed from the tax-exempt list, the food holiday was extended from one week to an entire month which will still allow consumers the opportunity to realize significant tax savings.
Gun Safety Holiday
The guidelines provided by Notice #21-06 are very straight forward in defining what constitutes gun safes and safety equipment. Gun safes are defined as any "locking container" designed for the "secure storage of one or more firearms." Gun safety devices are defined as any "integral device to be equipped or installed on a firearm that permits the user to program the firearm to operate only for specified persons designated by the user through computerized locking devices or other means integral to and permanently part of the firearm." For example, a trigger lock constitutes a gun safety device as it only allows the gun to be operated when it is unlocked by the person with the key. The 2021 sales tax holiday for Gun Safety Equipment was originally designed to end on June 30, 2022, but the state of Tennessee has essentially extended this holiday another year, making this a two-year sales tax holiday.
Traditional Sales Tax Holiday
In addition, the TN Department of Revenue has also issued guidelines for the traditional sales tax holiday items. Clothing and school supplies cannot cost more than $100 per item, while computers cannot cost more than $1,500. Below are some items that do NOT meet the criteria of a computer for sales tax purposes:
- Individually purchased software
- Printer supplies
- Household appliances
Jewelry, handbags, and sports equipment are not considered clothing or school supplies; therefore, they are not included in the sales tax exemption.
Overall, the largest change in 2022 is the removal of the prepared foods from the tax-exempt list. The tax effect of this change was counteracted by the extension of the food sales tax holiday. Hopefully the combination of the three sales tax holidays will help TN shoppers get a break!