Since 2015, Ohio has had a sales tax holiday prior to the start of school, despite protests from many tax experts that these are an ineffective way to run a tax system. In 2024, however, the state expanded its holiday from three to ten days, covering a larger variety of products under $500. Last year, it only covered clothing under $75 and school supplies under $20.

Practically, all purchases of tangible personal property will be exempt with the exception of watercraft, outboard motors, motor vehicles, alcoholic beverages, tobacco, and vapor products of items that contain marijuana. This goes wildly beyond the extra pair of school pants and sneakers that many states have designed their tax holidays to cover. Connecticut and Maryland, for example, exempt sales taxes for clothing and footwear of less than $100.

As a result of these changes, the price tag of the tax break in Ohio is predicted to run to $740 million this year, compared to a little over $20 million in fiscal 2023.

While around 17 states offer sales tax holidays, according to the Federation of Tax Administrators, they vary dramatically in timing and purpose. In Louisiana, for example, there will be a tax holiday on firearms, ammunition and hunting supplies between September 6 and 8.

Some supporters of the tax holidays argue that they are beneficial for the economy, but a 2017 study by the Federal Reserve found that they merely shift the timing of expenditures around, rather than encouraging new ones. One central finding: “A tax holiday on clothing and school supplies in Ohio left no visible imprint on spending, even for the most relevant category of clothing and accessory stores.”

As an article by Bailey Williams, tax policy researcher from Policy Matters Ohio, wrote, “Both the Tax Foundation, a conservative research group, and the Institute on Taxation and Economic Policy, a progressive think tank, have called sales tax holidays ineffective, poorly targeted and another drain on public resources already squeezed by anti-government legislators.”

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