Is a Tax-Free Weekend Really a Bargain?

Missouri Sales Tax Receipt coin

Missouri Sales Tax Receipt coin (Photo credit: Kevin Dooley)

Let’s look at a couple of examples:

Purchase:            $10.00 in school supplies

Sales Tax:            $  0.81 (at 8.125%)

Total:                     $10.81

Purchase:            $100.00 in school supplies

Sales Tax:            $    8.13 (at 8.125%)

Total:                     $108.13

Will you save money? It looks that way. You can save 81 cents when you spend $10. You can save $8.13 when you spend $100.

The keys are:

  1. Do you really need these items?
  2. Will crowds cause you to take more time to make the purchase?

Some people buy things on sale just to feel like they’ve gotten a deal – even if they don’t truly need those items. In cases like this, the individual isn’t really saving money. They’re losing the full out-of-pocket amount they spent because they’re adding something to their inventory that they truly do not need.

Often with big sales come big crowds. With the big crowds comes more driving – and, therefore, more fuel –  to find parking, longer waits in traffic (time + fuel), slower walking in the store (time), longer checkout lines (time), and so on. If it would normally take you 15 minutes to get in and out of a store to make a purchase, but with a crowd it will take 30 minutes, you’ve just used 15 minutes to take twice as long to complete the same task. That extra 15 minutes could have been used to complete another task or … just relax.

If you absolutely need the items, and it won’t take you too much longer to make the purchases, then a tax free weekend is definitely a good deal for you. If not, you really need to think about whether or not you’re actually saving.

 
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