In recent years, Ohio has designated certain three-day periods in August as “sales tax holidays”, where the purchases of certain items made during the period were exempt from sales tax. Historically, the sales tax holiday was subject to limitations on qualifying items, as well as low maximum thresholds for the dollar amount of individual items. However, Ohio’s most recent budget bill, House Bill 33, enacted significant changes to expand the sales tax holiday beginning in 2024.
For 2024, the sales tax holiday has been extended to ten days, running from 12:00 A.M. Tuesday, July 30 until 11:59 P.M. Thursday, August 8 and will be afforded to all taxpayers within the state. The holiday includes purchases of all tangible personal property with a selling price of $500 or less. Sales of dine-in food at restaurants are included. However, taxable services, titled watercraft, motor vehicles, alcoholic beverages, tobacco, vapor products, and items containing marijuana are specifically excluded from the holiday.
How Will Retailers Conduct the Sales Tax Holiday?
The sales tax holiday applies to qualifying items with an individual selling price of $500 or less. There is no limit on the amount of the total purchase, however the qualification is determined item-by-item basis. Other factors to consider for applicability of the holiday:
- Retailers may not apply the exemption to the first $500 of the item and charge tax on the remaining amount. If the item exceeds $500, it is fully taxable.
- Retailers may not split items that are normally sold together in order to fall under the sales price threshold.
- The total price of “buy one, get one free” or similar transactions cannot be averaged to qualify both items for the holiday.
- If retailers offer discounts or coupons (including loyalty card programs) that reduce the price of an eligible item to $500 or less, the item will qualify.
- Discounts provided by manufacturer’s coupons or similar arrangements that entitle the retailer to third-party reimbursement do not reduce the item’s sales price for purposes of determining an item’s eligibility for the sales tax holiday. Rebates are also treated in this manner.
Sales Tax Reporting and Other Considerations
If a consumer was charged sales tax on a qualifying item during the holiday, the retailer must refund that tax to the consumer.
For reporting purposes, retailers will report all sales for the period on the gross sales line, then include all sales that qualify for the holiday on the exempt sales line (Line 2) of the applicable sales tax return.
The holiday applies to the entire sales tax rate, including county and transit authority permissive rates and retailers are required to participate in the sales tax holiday. Retailers should review their point-of-sale software to confirm that it can appropriately apply the exempt sales during the holiday period.
GBQ will provide updates as warranted if additional guidance is provided by the Ohio Department of Taxation. Please contact your GBQ representative if you have questions or if you would like to discuss the foregoing in greater detail.
