What is a Sales Tax Holiday?
A sales tax holiday is a day or period of days when a state will allow consumers to make purchases without paying sales tax. States began offering tax-free holidays as a way to boost in-state sales of back-to-school items, such as clothing, footwear and school supplies. Several states currently have sales tax holidays, and many more are weighing the idea.

Applying the Concept to the Digital Age
CEA recognized increasing legislative interest in sales tax holidays for clothing and footwear and took the lead in advocating that such holidays include high-tech products. Sales tax holidays are not a new idea, but applying the sales tax holiday to the digital economy is. CEA is urging states to create sales tax holidays for computers and computer-related products as a way to encourage their residents to embrace technology. In addition to promoting sales of computer-related technologies, CEA believes this is an innovative way to help bridge the "digital divide."

Tax-free holidays for PCs provide a great opportunity for consumers to purchase computers at a considerable savings. For example, a $1,000 to $2,000 computer can be bought at an average 5 percent discount, saving consumers $50 to $100. Such tax relief is of particular interest to low and middle-income households. CEA found that more than one-quarter (27 percent) of families with household incomes of less than $25,000 would be more likely to buy a home computer if they did not have to pay sales tax. In addition, almost half (49 percent) of all households who do not own a computer, but plan to buy one in the next year, say that a sales tax holiday would improve the likelihood of such a purchase. CEA also found that support for personal computer sales tax holidays is strongest among African American and Hispanic households with support averaging near 70 percent.

Growing List of States
CEA has supported the creation of sales tax holidays for computers, which have been enacted in 12 states to date. Following is a list of the states and the year of their first sales tax holiday covering computer products: Alabama (2006), Georgia (2002), Louisiana (2007), Massachusetts (2004), Missouri (2004), New Mexico (2005), North Carolina (2001), Pennsylvania* (2000), South Carolina (2000), Tennessee (2006), Vermont* (2003), and West Virginia* (2002).
* Note: Pennsylvania, Vermont and West Virginia have not announced a sales tax holiday for 2007.

CEA Policy Position: Sales Tax Holidays
2007 Sales Tax Holiday Information