The Connecticut Department of Revenue Services (DRS), has an extensive list of what items qualify for the tax exemption, which applies to items under $100.
While rebates are not permitted, the tax exemptions are applicable to eligible merchandise that is bought using a store discount or coupon. If the item costs more than $100 but a sale or discount brings it below $100 per item, it is tax exempt. You are also eligible with "buy one-get one free" offers, so long as the item's price is below $100.
You do not have to make your purchases in a retail store to qualify for the tax exemptions. Internet sales also qualify for the tax break. There is no sales tax on items under $100, and shipping costs are not considered to be part of the price of the merchandise, so it would therefore be tax exempt.
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This one-week exclusion applies to clothing sales made by Connecticut and out-of-state retailers to Connecticut customers.
Exclusion applies to each item sold. The exclusion applies to each item of clothing or footwear sold, regardless of how many items are sold to a customer on the same invoice. However, for any item that costs $100 or more, sales tax applies to the entire price of that item.
Articles normally sold as a unit. Articles that are normally sold as a unit (for example, a pair of shoes) must continue to be sold in that manner; they cannot be separated and sold as individual items to qualify for the exclusion.
Example: A suit normally sells for $150. The retailer cannot sell the pants for $75 and the suit coat for $75 in order to qualify the suit for the exclusion. However, if the pants and the coat are normally sold as separate items with separate price tags, the exclusion may apply to each item sold.
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Clothing and Footwear Defined: The exemption during the “sales tax holiday” week for articles of clothing and footwear, as described in Conn. Agencies Regs. § 12-426-30, includes most articles of clothing and footwear intended to be worn on or about the body. However, certain items are excluded.
Items not subject to the exemption. For purposes of the exemption, clothing and footwear do not include:
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Any special clothing or footwear primarily designed for athletic activity or protective use that is not normally worn except when used for the athletic activity or protective use for which it was designed.
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Jewelry, handbags, luggage, umbrellas, wallets, watches, and similar items carried on or about the human body but not worn on the body in the manner characteristic of clothing, and
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Articles of clothing considered safety apparel are fully exempt under a separate exemption in Conn. Gen. Stat. §12-412(91). (SeePolicy Statement 2004(4), Sales and Use Tax Exemption for Safety Apparel).
See the DRS website’s frequently asked questions (FAQs) for more details about what is considered exempt clothing and footwear during the exclusion week.
Cash Discounts, Coupon Sales, and Rebates: Cash discounts are price reductions that a store offers its customers, such as back-to-school sales. Tax is calculated on the final sales price (after all reductions have been taken). To determine if an item of clothing or footwear will be taxed during the exclusion week, the retailer should use the reduced sales price after the cash discount is deducted from the full or original sales price.
Example: A retailer sells a coat for $115. The retailer offers a 20% discount on the coat during the exclusion week. The sales price of the coat is reduced to $92 after the discount is taken. The coat is not taxable because it costs less than $100 during the exclusion week.
Coupons result in an immediate reduction of the sales price of an item when the coupon is presented to the retailer. Tax is calculated on the final sales price of the item after all coupons and other reductions have been applied. A retailer, a manufacturer, or another third party may issue coupons. To determine whether an item of clothing or footwear costs less than $100, the retailer should use the sales price after the face value of the coupon (or any higher value given to the coupon by the retailer) is deducted from the original sales price.
Example: A retailer sells a coat for $120. The retailer has a 25% off coupon in its advertising flyer, which the customer presents when buying the coat during the exclusion week. The sales price after the coupon is used is $90.00. The coat is not taxable because it costs less than $100.
“Buy one, get one free” and similar offers. If a retailer offers “buy one, get one free” or “two for the price of one” on items of clothing or footwear during the exclusion week, the exemption applies as long as the total sales price for each item is less than $100.
However, if a retailer offers “buy one, get one for a reduced price,” the two prices cannot be averaged to qualify both items for the exemption.
Example: A retailer sells a suit for $130 and offers a second suit for half price when bought with the first suit. The first suit costs $130 and does not qualify for the exemption. The second suit costs $65 (half price) and does qualify for the exemption. Together the two suits cost $195. The retailer cannot average the price of the two suits, to $97.50 apiece, to qualify both suits for the exemption.
Rebates, unlike discounts and coupons, do not reduce the sales price of an item. The tax applies to the sales price of an item beforethe customer obtains a rebate from a manufacturer or third party. The customer gets a rebate separately after the retail sale of the item.
Rain Checks: An article of clothing or footwear costing less than $100 that is purchased during the exclusion week using a rain check is not taxable. If a retailer issues a rain check to a customer during the exclusion week for an article of clothing or footwear costing less than $100 and the customer purchases the item after the exclusion week has ended using the rain check, the item is taxable.
Here are some other tips from the Better Business Bureau to take advantage of all the savings possible:
Create a budget - A budget will help shape your shopping list and limit purchases to only items you need. Knowing your budget will also allow you to put money towards larger items or a special purchase.
Research major purchases - When shopping for laptops, calculators, dorm refrigerators and other large purchases, do your homework. Research the brands you're looking for to see what meets your expectations.
Check for educational discounts - Some computer and software companies offer discounts to students and teachers with .edu email addresses. Some of these can be quite substantial, so check around.
Watch for sales - Compare prices between different retail stores, save coupons and be sure to redeem cash-back or rebate offers. Check retailers' social media for specials, and sign-up for email alerts for specials and discounts.
Don't skimp on certain items - There is little point in buying a $20 backpack that will have to be replaced by the end of the year. Pay a little more for items like that, which are capable of withstanding wear and tear.
Shop out of season - The tax free holiday is helpful, but some shoppers prefer to wait to stock up on back-to-school items when prices fall and seasonal items go on clearance.
Buy in bulk - Some schools ask parents to buy items that will be used by the entire class (tissues, hand sanitizer, etc.). Get together with other parents to shop in bulk. Parents of college students can also buy in bulk for snacks, toiletries and other items for future "care packages.
Save your receipts -You'll need them if you want to make an exchange or return an item. Remember some items are non-refundable or have a 30-day return period.