Does a Tax-Free Weekend Actually Save You Money?

As consumers, there are a few times of the year where our spending can get a little higher than normal. While people often budget ahead for occasions like holidays or birthdays, there’s one time of year in particular when things can add up really quickly — back to school.

According to Statista, in 2020, the average American household spent $789.49 on back-to-school (1) — nearly $100 more than in 2019.

With costs rising, families are looking for ways to save on necessities, not just for back to school but throughout the year. One way people do this is by taking advantage of their state’s tax-free weekend.

So what is a tax-free weekend? And is it actually worth it to shop during this timeframe? Are the deals amazing?

Let’s take a look.

What is Tax-Free Weekend?

A tax-free weekend, also known as a tax holiday, is when a state chooses to waive the taxes on eligible items for a specific period of time, usually a Friday to Sunday. These weekends generally occur in the late summer to coincide with consumers shopping for clothes, school supplies, electronics, and college dorm necessities.

Tax-free weekends are state-specific so the timing varies. Additionally, not every state chooses to participate, so before you start planning your excursion, you’ll need to check your state’s tax website. Some states also run more than one tax-free weekend per year.

Where Can I Save the Most on Tax-Free Weekend?

Every state has its own criteria for what items are included in tax-free weekends. School supplies, clothes, and footwear are the most common items, however, some states include things like electronics or appliances.

The items included in this tax-free weekend can also vary from year to year. In 2019, Texas included any products meant for water conservation. That same year, Mississippi exempted hunting supplies.

Each state determines what will or won’t be exempt, and in some states, only items under a certain dollar amount are eligible. For example, during the back-to-school tax-exempt weekend in Texas, only school supplies, clothing, footwear, and book bags that are under $100 are exempt.

Are There Any Drawbacks to Tax-Free Weekend?

Just because it’s a tax-free weekend doesn’t mean you’ll automatically save money if you shop. It will depend heavily on what merchandise your state includes, and if those items are what you’re looking to purchase.

Another thing to think about is the value of your time. Tax-free weekends generally bring out large crowds to shop, so depending on what you need, saving $10 may not be worth battling the mall when it’s a complete madhouse. If you’re thinking you can avoid this altogether by shopping online, it should be noted that many states do not extend the tax-free weekend exemption to online retailers.

Also, think about what you actually need. Sometimes we get so caught up in the excitement of getting a “deal” that we end up buying way more things than we initially intended. Even if you saved on the tax, the extra $50 or $100 you didn’t budget on spending can quickly cancel out those tax-free savings.

Tax-free weekends can also mean high demand for the items people need at that specific time of year, like school supplies, so there’s also the risk of not being able to find what you actually set out to purchase.

Look for Savings All Year Long

When planning your strategy for taking advantage of tax-free weekends, also think about how you can save throughout the year. Just because something is on sale during a tax-free weekend doesn’t mean you’re actually getting the best price.

For example, let’s say you’re looking for a new laptop. During this tax-free weekend, that laptop is $100 off. However, that same laptop goes on sale at other times of the year and is often $300 off. By keeping an eye on the cost of items you know you’ll need in the future, you can actually save more money by buying at other times of the year, as opposed to just waiting for tax-free weekends.

Bottom line: tax-free weekends CAN be great for the budget, but having a strategy for finding deals all year long is always a great move for your finances.

Sources:

1. https://www.statista.com/statistics/286432/average-back-to-school-spending-in-the-us/

Kevin Stoddard is a LPL Financial Advisor with Stoddard Financial in Medfield, Massachusetts. Stoddard helps clients throughout New England to identify, plan, and execute strategies designed for securing their desired financial future. With their Financial Wellness @ Work program, they engage, educate, and empower employees by helping them to understand and appreciate the value of their benefits package.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This material was prepared by Crystal Marketing Solutions, LLC, and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate and is intended merely for educational purposes, not as advice.

Frequent travelers have their routines set. They know how to maximize their elite status perks and how to save money on hotels in the process. Still, there are some tricks of the trade that may not be so familiar to everyone.

Here are eight ways to save money on hotels, whether you're staying for one night or several.

1. Become a loyalty program member

Loyalty programs are about more than just racking up miles and points to redeem later. Sure, those are amazing benefits. The experience snowballs to even more perks when you earn elite status. But, there’s another reason why you should join a loyalty program even if you don’t travel much: discounts on hotel stays. In an effort to encourage people to book directly, hotel programs offer a discount to members when they book through their own channels. You can save quite a bit of money this way.

Popular hotel chains and their rewards programs include:

Other discount programs include AAA and AARP, which can slash the cost of a stay. These, however, carry a fee to join, whereas hotel loyalty programs are free.

» Learn more: How to choose the best hotel loyalty program for you

2. Save with best rate guarantees

Since hotel companies want you to book directly with them, most offer a best rate guarantee program. This assures that you will find the lowest rate on their own website. When booking hotel stays via an online travel agency, like Booking.com or Orbitz.com, hotels have to pay a commission. Encouraging direct bookings helps to avoid that.

If you find the same room at your hotel on the same dates for a lower rate elsewhere, hotel companies will often offer a reward of some sort. This can include a percentage back as a refund or bonus points. Knowing about best rate guarantees can help save some cash, especially when searching for hotels in pricey destinations like Miami or New York.

» Learn more: How to find and book a hotel

3. Spend strategically on hotel credit cards

Depending on which hotel brand you frequent most often, signing up for a hotel-affiliated credit card can deliver substantial savings for upcoming stays. Not only will you earn bonus points for using the card to cover the room rate, but it may come with elite status perks that can cut down on costs during your visit. For example, the Hilton Honors American Express Aspire Card offers top-tier Diamond status in Hilton’s loyalty program, and the IHG® One Rewards Premier Credit Card comes with Platinum Elite status in IHG's loyalty program.

Things like breakfast, club lounge access, late checkout and even welcome amenities like fruit plates and drinks can come in handy. You won’t have to pay for these perks during your stay, which helps you save.

4. Take full advantage of onsite benefits

Like elite status perks, except available for everyone, some hotels offer free breakfast, evening happy hours and other benefits. Many brands like Embassy Suites by Hilton and Staybridge Suites make these extra perks part of their value proposition. If you’re traveling with the family and looking for the best Disney hotels, why fork over extra cash for breakfast each morning if some hotels offer it free of charge?

Embassy Suites has complimentary cooked-to-order breakfast that amounts to big savings for a family. All rooms at Embassy Suites are suites with a separate bedroom and living area. Why pay for a suite upgrade elsewhere when that’s the standard at this brand? Understanding what each brand within a hotel chain’s portfolio offers can lead to substantial savings.

» Learn more: Tips for booking big hotel rooms for families

5. Get bonus points by booking via cash-back portals

The more expensive your stay (pricier rooms or longer visits), the more valuable this one will be. Using cash-back portals to make online purchases is a great way to save some cash as you can 'double dip' your award earnings. All that's required is that you visit a shopping portal website, like Rakuten.com or TopCashBack.com, and click on the online retailer or hotel website you want to book.

While not all hotel chains participate, many do. You'll earn a percentage back of what you spend in your account, which then comes back to you in the form of a check or gift cards. Airlines and hotel companies also have their own shopping portals if you prefer to receive those benefits as miles or points.

6. Roll the dice with prepaid room rates

This one is for the daring traveler. Prepaid rates are usually nonrefundable and can shave a nice chunk off the cost of a hotel stay. What you save in money though, you lose in flexibility. If your plans change at the last minute, you won’t be able to get your money back without Cancel for Any Reason travel insurance. Still, this can be a solid way to lower the cost of a hotel stay if you are certain that you plan to spend the night.

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Nerdy Tip

Several Las Vegas hotels and other high-end resorts may charge a daily 'resort fee' that gets tacked onto the room rate. These are often not included in a prepaid rate.

» Learn more: The best Las Vegas hotels without resort fees

7. Strike up a deal

If you plan to visit a hotel often or for an extended period of time, give the hotel’s sales department a call. Chances are they might offer you a discount for booking directly. Hotels often offer these deals for group bookings, and if you'll be staying a significant number of nights over the course of the year, they may want to secure your business. Of course, this will vary by city and property, but it’s always worth a try.

8. Optimize for low-cost options by booking with OTAs

If you don’t care about singular hotel loyalty, earning points or taking advantage of elite status perks, some websites and apps like Hotel Tonight or Priceline offer bargain deals at the last minute. This is a great way for a hotel to dump excess inventory in the market without jeopardizing their reputation. These deals are opaque, which means you don’t know the exact hotel until you pay for it. You can save money this way, but you may not always get the best room in the house.

» Learn more: The pros and cons of joining multiple hotel programs

Savings and discounts for hotel rooms, recapped

What will you do with the extra cash you save on hotels? Savvy travelers will put these money-saving tips to good use the next time they book a hotel.

Consider the tradeoffs of booking the cheapest rates versus not earning loyalty points. If status or earning free night stays is not that important, you can use the money you save for something more personally valuable at your destination.

The next time you make a hotel reservation, see if any of these pointers can put some extra cash in your wallet.