How does sales tax holiday change tax?
Suppose a person buys something on a sales tax holiday.
Will that change his federal tax or state/local tax?
Sales tax holiday is different for different states.
Does it mean that sales tax holiday only affects his state tax?
Do New York State and City have sales tax holiday?
If sales tax holiday affects his federal tax, will the expense of
the purchase become
a deduction when calculating his adjusted gross income, or
a deduction in his itemized deductions, or
a tax credit?
Thanks.
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I believe you are confusing sales tax with income tax. The tax holidays in the US are only for sales tax. Consumers purchasing certain goods during the tax holiday do not have to pay sales tax like they normally would. Effectively the price is slightly lower during those days with the purpose of giving people an extra reason to shop at that time. During the tax holiday the stores make the exact same profit that they normally do, but they may experience a bump in sales simply because more people will shop during that time.
Income tax for both consumers and the businesses is not affected by this.
Although New York state was the first state to implement a tax holiday 20 years ago, they no longer have one today, though they do have certain goods which have a lower tax rate year round.
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