Aug 5, 2022 - Business

Back-to-school tax break starts today

Kid with blue hair reaching for scissors
A child shops for school scissors. Photo: Patrick T. Fallon/Bloomberg via Getty Images

The 10-day tax holiday for back-to-school shopping starts today.

Why it matters: The state, which introduced the holiday earlier this year to help Illinoisans afford supplies amid rising inflation, estimates it will save families $50 million.

Context: Gov. J.B. Pritzker added the tax holiday to his 2022-2023 budget along with other measures, like suspending the gas tax increase.

Details: It's not a tax freeze. The state sales tax will be lowered from 6.25% to 1.25% through Aug. 14 on most back-to-school items, including:

  • 👟 Shoes
  • 👖 Shorts, pants and dresses
  • ✏️ Various school supplies

Yes, but: Individual items must cost under $125 to get the tax break. Some bigger items are excluded, like:

  • 📱 Cellphones
  • ğŸ’Ž Jewelry
  • ⚽️ Sports accessories

Zoom in: Local parents are spending an average of $886 per child on supplies this year, 34% more than the projected national average of $661.

The big picture: The tax break comes at a time when many Chicagoans are worried about their financial outlook. A new survey by Deloitte found that:

  • 51% of local shoppers expect the economy to weaken in the next six months.
  • 31% say their financial situation has worsened since last year.
  • 58% are concerned about the increase in back-to-school prices due to inflation.

What they're saying: "We've seen a significant shift in parents' priorities this year, with mental health at top of mind," Matt Adams, a principal at Deloitte Consulting who specializes in retail, tells Axios. He notes that 46% of parents say they've "purchased products or services to address this issue for the coming school year."

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