Big Changes to Ohio’s Sales Tax Holiday: What Businesses Need to Know

Ohio’s annual sales tax holiday begins July 30 – and it’s not just for back-to-school shopping this year. The state legislature significantly expanded the 2024 holiday, including the timeframe, qualifying items, maximum purchase price, and who can participate. Business owners should plan carefully as the holiday is not optional and will have a significant impact on both purchases and sales.

Who Is Impacted?

• Ohio business owners
• Ohio consumers
• Retailers* that hold an Ohio vendor’s license or seller’s use tax account

*Participation is mandatory for Ohio retailers.

How Long Does the Sales Tax Holiday Last?

• July 30, 2024, at 12:00 a.m. EST through August 8, 2024, 11:59 p.m. EST

What Items Qualify?

• Tangible personal property
  • Normally sold separately
  • Individually priced $500 or less
• Meals at restaurants are included for menu items $500 or less each, regardless of total bill
• Rentals of eligible property that are $500 or less and invoiced during the holiday
• Business-to-business transactions $500 or less each

What Items Do Not Qualify?

• Motor vehicles, outboard motors, or watercraft that are required to be titled (even if $500 or less)
• Alcoholic beverages
• Tobacco, vapor, or marijuana products
• Taxable services, such as repairs

The holiday will act like a sales tax exemption, granting consumers in Ohio greater purchasing power and allowing their dollars to stretch a little further during this time for items that individuals or businesses may be purchasing anyway. Examples of business purchases that otherwise generally do not qualify for exemption, if $500 or less each:

• Office supplies
• Office equipment
• IT equipment and prewritten computer software
  • Sample scenario: Upgrade 100 office computer monitors that cost $450/each. This means $45,000 would qualify for sales tax exemption.
• Cleaning supplies, repair, and maintenance supplies
• Veterinarian practice supplies used in providing services
• Doctor/dentist practice supplies used in providing services
• Contractor materials, tools, and equipment rental
• Manufacturing maintenance shop items
• Otherwise gray areas where an existing sales tax exemption may currently be overextended
• Safety items
• Furniture and fixtures upgrades
• Promotional products
• College textbooks (hard copy or digital/electronic)
• Magazine subscriptions (if charged during the holiday)
• Withdrawn inventory used in a taxable manner

Challenges for Retailers

For retailers, including out-of-state retailers with Ohio sales or use tax collection responsibilities, the sales tax holiday can be a complicated web of rules for POS systems and internal accounting teams to follow for a brief period. These complications include:

• Identifying eligible sales and applying the exemption correctly to both the sale and shipping charges
• Understanding how the holiday impacts discounts, rainchecks, and rebates
• Handling refunds, exchanges, and returns for exempt items sold during the holiday, even weeks after the holiday has ended
• Reporting the exempt holiday sales, in conjunction with sales made during months that were not exempt, for two monthly periods
• Direct-pay permit holders should keep notes for not self-assessing use tax during this holiday

For answers to additional questions, the Ohio Department of Taxation provides a comprehensive list of FAQs on its sales tax holiday help center.

KSM closely follows legislative activity across the country. Thus, if you have questions about how this sales tax holiday might impact your business, please contact your KSM advisor or fill out this form.