When it comes to tax-free shopping, Tennessee is doing things a little differently this year. For 2021, the Tennesee General Assembly has approved two additional tax-free holidays on top of its traditional tax-free holiday on clothing, school supplies and select electronics. The two new holidays will grant a tax exemption to food, as well as gun safes and gun safety devices.
Tennessee’s current statewide sales tax is 7% and many local jurisdictions collect an additional local tax of up to 2.46%. That means that shoppers can save as much as 9.46% in sales tax on qualifying purchases during the three tax-free holiday periods.
Tennessee’s traditional tax-free weekend runs the last Friday in July through the following Sunday every year. This year, the state’s traditional tax-free holiday (which is geared at back-to-school shoppers) will run from 12:01 on Friday, July 30 until 11:59 p.m. on Sunday, August 1.
During the state’s annual sales tax holiday, most clothing, school supplies and computers are exempt from sales tax if the purchase price falls beneath a certain threshold. Pricing limits and examples of eligible products are listed below:
Clothing $100 or less. This includes general apparel, uniforms, shoes and swimsuits. Note that this is reduced from last year’s exemption minimum when clothing $200 or less was exempt.
School and art supplies $100 or less. This includes backpacks, notebooks, textbooks and lunch boxes. Note that this is reduced from last year’s exemption minimum when school and art supplies $200 or less were exempt.
Electronics $1,500 or less. This includes desktops, laptops and tablets for personal use. Note that this is reduced from last year’s exemption minimum when electronics $3,000 or less were exempt. Even so, the $1,500 threshold is much higher than in most states and, notably, would include some pricier laptops and tablets, such as Apple’s MacBook and iPad Pro.
Note that Tennessee’s dollar limits work a bit differently from other states’. In some states, if an item is more expensive than the dollar limit, only the amount over that limit is taxed. However, in Tennessee, if an item’s price is above the limit (say you buy a piece of clothing that’s $120), the whole thing is taxed.
Before filling your cart, keep in mind there are certain types of clothing accessories, school supplies and electronics that do not qualify for tax exemption. The following products will remain taxable during Tax-Free Weekend:
•Jewelry, accessories, handbags and sports gear.
•Computers purchased for business use.
•School instructional material.
Does Tennessee’s traditional tax-free weekend include online purchases? Yes. You must, however, order and pay for the item during the tax-free holiday period. In addition, only online purchases made from Tennessee retailers and delivered to destinations within Tennessee qualify for the exemption.
If I use a coupon to lower the price of an item during tax-free weekend, does it become tax free? That depends on the type of coupon used. If you use a manufacturer’s coupon that brings the price you pay below the threshold, you still have to pay tax. If, however, the store offers a discount that brings the price of the item down below the threshold, it’s tax free. So take advantage of store discounts during tax-free weekend.
Can items bought during Tennessee’s traditional tax-free weekend be exchanged? You will still be able to exchange eligible items for the same item in a different size or color after tax-free weekend is over.
The state’s tax-free holiday on eligible food, ingredients and prepared food items will run from 12:01 a.m. on Friday, July 30 until 11:59 p.m. on Thursday, August 5. Tennessee’s food sales tax holiday is a special event approved for 2021. During the six-day holiday, most food, food ingredients and prepared food items are exempt from sales tax. This includes eligible prepared foods from restaurants, food trucks, caterers and grocery stores. Eligible food products are listed below:
Food and food ingredients. This includes virtually any substance sold to be eaten for nutrition or taste. One notable exception is candy — sorry, sweet-tooths!
Prepared foods. This includes any heated food with two or more ingredients prepared and sold by the seller, or food that is sold with eating utensils like plates, plasticware, cups or straws provided by the vendor.
Before hitting up your grocery store, restaurant or food truck, keep in mind there are certain types of foods and drinks that do not qualify for tax exemption. The following products will remain taxable during the food tax-free holiday:
•Prepared foods that require cooking by the consumer.
Does pre-ordered food qualify for the tax exemption? You can pre-order food, food ingredients or prepared food items if you pay for the food before or during the food sales tax holiday and the food is received during the holiday. For example, if you paid a caterer on June 25 for food that will be served at an event occurring on Friday, July 30, that food would be exempt from sales tax since it is served during the holiday.
However, food that is pre-ordered to be received after the tax holiday is still taxable — even if you place your order during the food sales tax holiday. For example, if you paid a caterer on Monday, August 2 for food that will be served at an event occurring on Friday, August 13, that food would still be taxed because it is served after the holiday.
The state’s tax-free holiday on eligible gun and gun safety equipment will run from 12:01 a.m. on Thursday, July 1 until 11:59 p.m. on Thursday, June 30. Tennessee’s gun safety sales tax holiday is a special event approved for 2021 & 2022. During the year-long holiday, most gun safes and safety devices are exempt from sales tax. Eligible products are listed below:
Gun safes. This includes containers and enclosures that lock with a padlock, key, combination or other locking device. To qualify, the locking container or enclosure must be designed and intended for the safe storage of one or more guns.
Gun safety devices. This includes any integral device designed to be installed on a gun that lets you program the weapon to operate only for certain, designated users.