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Tennessee Launches Back-to-School Sales Tax Holiday
- Adam Tahir
- Jul 27
- 3 min read
Updated: Oct 27
Tennessee’s annual Back-to-School Sales Tax Holiday is coming to a close today, Sunday, July 27 at 11:59 p.m. CT. Now in its 20th year, this event has become a vital seasonal planning tool for both consumers and businesses.
Tennessee has no personal income tax and one of the highest average sales tax rates in the U.S. This weekend’s holiday gives residents a break from Tennessee’s combined 9.61% average sales tax. It provides relief just in time for school prep while adding a short but critical layer of tax compliance complexity for merchants.
What’s Included in the Tax Holiday?
The 2025 holiday applies to purchases made between July 25–27, either in-store or online (if delivered to a Tennessee address). The exemptions apply automatically and cover:
Clothing
$100 or less per item
Includes most school-appropriate apparel but excludes accessories like jewelry, sports gear, or handbags.
School Supplies
$100 or less per item
Includes backpacks, notebooks, pencils, binders, and educational materials.
Computers and Tablets
$1,500 or less per item
Applies to personal computers, laptops, and tablets for personal or educational use (no business purchases).
Note: Shipping charges count toward the price limit. Anything over the cap is fully taxable.
Key Considerations for Retailers and Tax Professionals
1. POS Configuration Is Critical
Retailers must ensure that point-of-sale systems are correctly configured to apply exemptions without human override errors. Even small pricing misclassifications can result in audit risk or customer disputes.
2. Online Sellers Need Tennessee-Specific Logic
E-commerce platforms must properly apply tax logic based on ship-to address, not billing address. Failure to do so can trigger unintended sales tax collection or failure-to-collect penalties.
3. No Business Exemptions
The holiday is intended strictly for personal, non-business purchases. Retailers and CPAs must understand and enforce this limit, particularly for computer purchases.
What This Means for Compliance and Strategy
Tennessee’s sales tax holiday is one of many state-level tax holidays happening this summer across the U.S. For advisors and retailers, it underscores the importance of:
Proactively adjusting tax logic by jurisdiction
Educating staff and clients on qualifying items and purchase timing
Tracking volume spikes that could affect inventory, accounting, and audit trails
Firms working across state lines or in e-commerce should also monitor other upcoming holidays, such as Florida’s month-long August exemption and Texas’s late August event.
Looking Ahead
While Tennessee’s tax holiday ends tonight, sales tax holidays are increasingly used as policy tools to provide targeted tax relief, stimulate retail activity, and support seasonal spending. As states expand and layer these rules, both businesses and advisors must stay proactive to navigate the complexity and seize the opportunity.
The Importance of Staying Informed
Understanding the nuances of sales tax holidays is crucial for both consumers and retailers. This knowledge helps in making informed purchasing decisions and ensuring compliance.
Bizora AI keeps up with every state’s sales tax exemption windows and generates custom alerts, logic updates, and audit readiness reports for your clients.
Conclusion
Tennessee’s Back-to-School Sales Tax Holiday offers significant benefits for parents and merchants alike. By taking advantage of this opportunity, families can save money while preparing for the school year. Retailers, on the other hand, must ensure compliance and readiness to handle the influx of sales.
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