Quick Tax Quiz: When and Where Did the Sales Tax Holiday Trend Start?

February 25, 2010

The correct answer is E) Ohio and Michigan offered sales tax holidays for automobile purchases in 1980.

Ohio and Michigan enacted the first sales tax holidays in 1980 when they offered tax holi­days for automobile purchases, and New York sparked the modern trend, with the first sales tax holiday for clothing in 1997. New York’s objective was to tackle border shopping, the phenomenon of residents travel­ing to nearby states to take advantage of lower sales tax rates (particularly clothing purchases in New Jersey).

For more on sales tax holidays, see the Tax Foundation Special ReportSales Tax Holidays: Politically Expedient but Poor Tax Policy” (PDF).

More research and blog posts on sales tax holidays.


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