Sales taxes are responsible for funding a sizeable portion of the majority of states’ budgets. States implement sales taxes—both general and selective—on a wide variety of goods and services sold to consumers in the states. They remain a popular means to collect needed revenue for state governments, second only to transfers from the federal government. Nevertheless, because of sales taxes’ regressive nature, several states have proposed reforms to their sales taxes, such as reductions or exemptions on certain products. Here are some states recently enacting or considering sales tax suspensions or exemptions.
Colorado lifted its sales taxes on feminine hygiene products and diapers effective August 10. On June 3, 2022, Governor Polis signed HB1055, which eliminated the state’s sales tax on all feminine hygiene products, diapers, and incontinence products. HB1055 passed with bipartisan support, and the state expects the legislation will save Coloradans $9.1 million annually.
Beginning August 21, the state will temporarily suspend its sales tax of 6.35% on certain items. Through the week of August 21 and ending on August 27, clothes and shoes valued at less than $100 will not be subject to sales taxes. The temporary sales tax suspension will also apply to sleepwear, swimsuits, work clothing, socks, and diapers.
Under SB157, Illinois reduced its sales tax for ten days, from August 5 through August 14. For the ten days it was in effect, rates on specified items such as clothes and shoes valued at less than $125 dropped from 6.25% to 1.25%. The $125 limit did not apply to back-to-school items.
Governor Whitmer has proposed to suspend the state’s sales tax on back-to-school items and other school supplies. The governor is proposing a temporary suspension in the sales tax on these goods as part of her MI Back to School Plan, designed to help families deal with the rising costs of school supplies.
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