First, we hope everyone is faring well out there as we continue to bring you sales tax related COVID-19 coverage.
As we have reported in our blog post on Sales and Use Tax Filing Due Dates Affected by COVID-19, many states are scrambling to help businesses survive during the pandemic.
Often, this state-level response means allowing businesses to delay filing and paying sales tax in order to keep cash flowing.
And two other states (so far) and Puerto Rico have gone further and either proposed or enacted sales tax holidays. You can see a current list of 2020 sales tax holidays in every state here.
While in many cases individual state departments of revenue can make decisions about sales tax extensions in emergency situations, sales tax holidays generally require an act by a state’s legislature.
As of this writing, no states in the contiguous US have acted to pass new COVID-19-related sales tax holidays yet, but we’ll go over Puerto Rico’s holiday, and the two other proposed sales tax holidays below, and update here if other states follow in their footsteps.
Puerto Rico’s Sales Tax Holiday
Puerto Rico has passed two temporary sales tax holidays on Prepared Food and Essential Items.
March 20-April 19, 2020 – Prepared foods (but not alcoholic beverages) will be temporarily exempt from sales tax.
March 23-April 30, 2020 -“Articles of necessity” will be temporarily exempt from sales tax. Items falling under the sales tax exemption include:
- Hand sanitizers
- Personal disinfection items (such as soap, shampoo, and wet towels or wet wipes)
- Isopropyl alcohol
- Disinfectants and antiseptics
- Articles for disinfection and / or household cleaning (such as soaps, detergents, chlorine and disinfectants)
- Vinyl gloves
- Pain relievers and medications with acetaminophen or ibuprofen (tablets, suppositories, liquid)
- Anti-catarrh medications, including antihistamines
New Jersey’s Proposed COVID-19 Sales Tax Holiday
New Jersey Assemblyman Brian Bergen called for a two month New Jersey sales tax holiday over the months of May and June to encourage spending in New Jersey businesses.
So far, this idea is only in planning stages, and we’ll report back here if the New Jersey Assembly makes this plan a reality.
Michigan’s Proposed COVID-19 Sales Tax Holiday
Michigan’s sales tax holiday is a little different. State Representative Lynn Afendoulis, chair of the Michigan House Tax Policy Committee, has proposed a temporary sales tax holiday once the pandemic ends.
The holiday would waive the state’s 6% sales tax on purchases made at physical locations. A companion bill would waive the state’s use tax.
So far, New Jersey and Michigan are the only two states to float the sales tax holiday idea. And in the throes of COVID-19, we can have no idea when states will feel confident they can encourage shoppers to patronize physical businesses safely. But we will continue to follow states’ various responses to these unprecedented times and keep you up to date. Stay safe and well out there.