House Bills 4824 and 4825 were introduced and referred to the Tax Policy committee early August. These house bills propose what will be, if passed by the Michigan Legislature and signed by the Governor, the only annual tax holiday in Michigan.
The proposed tax holiday provides an exemption on certain school supplies from the state sales and use tax every third Saturday in August. As written in the bills, the following items would be exempt from tax:
- Clothing, if the sales price of each individual item is not greater than $100.00;
- School supplies, if the sales price of each individual item is not greater than $20.00;
- A personal computer purchased for noncommercial home or personal use, if the sales price, less any manufacturer’s rebate, of each individual personal computer is not greater than $1,000.00; and
- A personal computer accessory purchased for noncommercial home or personal use, if the sales price, less any manufacturer’s rebate, of each individual personal computer accessory is not greater than $500.00.
School supplies are defined by the bill as “pens, pencils, erasers, crayons, notebooks, notebook filler paper, legal pads, binders, lunch boxes, construction paper, markers, folders, poster board, composition books, poster paper, scissors, cellophane tape, glue, paste, rulers, computer disks, protractors, compasses, calculators, and similar items.”
Having many educators in my family and circle of friends, August signals the time when they would go bargain hunting for the “best deal” on school supplies for their classrooms. Messages and phone calls regarding the “deal” they just saw would be commonly shared amongst the educators. Then they would collaborate their efforts to buy the supplies from all of the store’s locations in the tri-county area. This legislation would assist in easing the economic burden as they prepare their classrooms for the new school year.
Twenty-one states have at least one sales tax holiday. Most are back-to-school tax holiday, like the one proposed in House Bills 4824 and 4825, but others include energy star appliance sales tax holiday (to encourage consumers to buy energy efficient appliances) and severe weather preparedness sales tax holiday (to encourage people to buy items needed during severe weather, for example, batteries and flashlights).
Dickinson Wright’s Tax Attorneys will continue to monitor the status of the proposed bills, and update the Tax Blog accordingly.
If you have any questions, please contact Emily Burdick in the Detroit office at ext. 3127.