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No MD Sales Tax on Clothing Under $100 August 23-27

[ Return To Senator Roy Dyson's Newsletter ]

Posted on August 04, 2006:

Senator Dyson It’s really hot out there right now. Some people are going to the ocean, to milder climates, staying close to the pool or near the air conditioning. August is always hot.

But by the end of the month, you can get out of the heat and save money doing it if you get out to your local malls and stores to take advantage of a bill that passed unanimously in the General Assembly Session of 2005.

Senate Bill 599, which I co-sponsored and is now law, gives you five days at the end of August to be exempt from paying Maryland sales tax on clothing or footwear with the exception of accessories for the period of August 23-27 if the taxable price of the item of clothing or footwear is $100 or less.

This comes at a perfect time since school will be getting underway and parents will have plenty of shopping for clothes to do.

Tax-free items include sweaters, shirts, slacks, jeans, dresses, robes, underwear, belts, shoes and boots. What is not exempt are accessory items such as jewelry, watches, watchbands, handbags, handkerchiefs, umbrellas, scarves, ties, headbands and belt buckles.

Not just shoppers benefit from this bill. The Maryland Retailers Association was a strong supporter of this bill because it is a proven winner for small businesses.

Another similar bill sponsored by Senator Thomas “Mac” Middleton in 2001 was a major success, which is why we passed similar legislation this year.

According Senate Bill 599’s fiscal note, a 1998 Survey of U.S. Business by the U.S. Census Bureau found that 91.7 percent of the retail firms in Maryland had less than 50 employees.

“This bill could cause a net increase in sales for small businesses to the extent that sales would be made in Maryland during the period that would otherwise have been made out-of-state, through the Internet or by mail order,” according to the bill’s fiscal note.

“Small businesses located in shopping malls or other areas with a number of stores in close proximity, may experience increases sales for nonapparel items because of increased foot traffic due to the tax-free week.”

The Comptroller’s office is doing an excellent job promoting this “buy up” period of time. There are brochures available that do a good job explaining the law including a Frequently Asked Questions section. One question on the brochure asks: If the total cost of several exempt items comes to more than more than $100, do I still have to pay the tax?

The answer is: Each qualifying article of clothing or footwear selling for $100 or less is exempt, regardless of how many items are bought at the same time. For example, two $60 sweaters bought at the same time are both exempt, even though the total purchase price is more than $100.

Another question: Is the first $100 of a more expensive item tax-free. The answer: No. If a suit costs $110, sales tax is due on the entire $110.

So make sure you are careful to check the price tag on everything you are buying.

To learn more about “Maryland’s Sales Tax Holiday,” the comptroller’s website is http://www.marylandtaxes.com; the e-mail address is shopmaryland@comp.state.md.us or call (410) 260-7980 or toll free at 1-800-MD TAXES. TTY users, call via Maryland Relay at 711 or 1-800-735-2258.

Happy shopping! It’ll keep you out of the heat!

[ Return To Senator Roy Dyson's Newsletter ]

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