Iowa, Illinois business owners expect brisk business during sales tax holiday

For families preparing to head back to school in the tri-state area, today kicks off an annual opportunity for savings on certain items.

Iowa’s annual sales tax holiday will take place today and Saturday, Aug. 6. On these dates, sales tax will not be charged on most types of clothing or footwear that cost less than $100. All businesses open on both days must participate.

“Certainly, there are costs incurred for families across the Dubuque area as kiddos head back to school in the next few weeks,” said Molly Grover, president and CEO of Dubuque Area Chamber of Commerce. “Especially in light of increased prices and inflation, this is an opportunity for residents of the community to save a little on costs and expenses for families going back to school.”

Illinois also has a sales tax holiday this year, beginning today and running through Aug. 14. During this 10-day period, state sales tax is reduced by 5% on qualifying clothing and footwear under $125, as well as school supplies.

Wisconsin is not among the states with a sales tax holiday this year.

A press release from National Retail Federation states that an annual survey found 38% of consumers nationally plan to cut back on other spending to cover costs for the upcoming school year amid continued inflation.

The release states that back-to-school shopping is expected to match the $37 billion in spending last year, which was a record high, and families plan to spend on average about $15 more than last year on school-related items.

However, area business owners expect to see their usual, albeit busy, crowds for the sales tax holiday.

Julie Berstler, owner of Gotta Have It, 315 Bluff St., said the sales tax holiday always is a busy weekend for the store.

“People get to cash in on marked-down clearance items, and, on top of it, pay no tax,” she said. “Plus, we have a lot of our fall items in, so they get to start their fall buying and pay no tax.”

But Berstler said it is hard to guess whether or not inflation will cause even more shoppers to take advantage of not having to pay sales tax on certain items.

“If I look back at the last several months, it has not affected us as of yet,” she said. “People still seem to be buying. We’re very optimistic.”

However, she noted that higher gas prices might encourage more people to be strategic about where they shop and stick to local stores.

“Some of our out-of-town customers might take a short trip to Dubuque rather than far trips to other cities,” Berstler said. “We’re working hard to keep our prices good, and hopefully people will just continue to buy.”

Ben Graham, owner of Graham’s Style Store, 890 Main St., also said he did not think inflation would cause the tax-free weekend to be more successful than usual.

“I think it’s just kind of part of their buying ritual or pattern,” he said of the weekend. “But maybe it’s in the back of their mind that, ‘Oh, gas prices are higher. Maybe it would be nice to save a little bit.’”

However, Andi Deckert, manager at Honest John’s Emporium in Galena, Ill., said she believed more people will be out shopping to take advantage of savings since prices of items have climbed.

“I definitely think people will be buying more,” she said. “I know a lot of stores are having sales, too, with 25% off to 35% off. At the emporium, we have a lot of markdowns.”

Grover called the sales tax holiday a “win-win” for both business owners and consumers, noting that money spent at local businesses during the holiday will stay in the community.

“The tax-free holiday certainly increases traffic over that weekend,” she added.