The Ohio Department of Taxation recently announced that the state’s annual sales tax holiday for 2025 will begin at midnight on Friday, August 1, and end at 11:59 PM on Thursday, August 14. Participation by all sellers of taxable items in Ohio is mandatory. The exemption will apply to both state and local sales taxes.
This exemption applies to the sale of all “tangible personal property” sold for a per-item price of $500 or less during the holiday period. The state defines tangible personal property as “any property that can be seen, weighed, measured, felt, or touched, including prewritten computer software.” Business-to-business sales are included, as are meals served in restaurants. However, the following items are excluded from the sales tax holiday: items costing more than $500; all sales of taxable services; watercraft requiring titles; outboard motors; motor vehicles; alcoholic beverages; tobacco; vapor products; and items containing marijuana.
Whether or not the $500 sales tax exemption applies during the holiday is determined by the per-unit price of the individual item, not the entire transaction. For example, if a consumer buys multiple items of clothing in one transaction and the total is over $500, no sales tax will apply if every item of clothing is priced at $500 or less. Sales tax will apply entirely to any item selling for over $500; there is no partial exemption given on the first $500 of the sale price. Other important details regarding the holiday:
- When items are sold under some kind of “buy one, get one free” promotion, only the actual price paid for the purchase determines whether the exemption applies. For example, an item purchased for $600 with another of the same item given for free cannot be treated as two items purchased for $300 each, in which case the exemption would not apply.
- Items normally sold in pairs or other quantities sold together, such as a pair of shoes or skis, cannot be split up to fall under the $500 exemption threshold.
- If items are sold with items that do not meet the exemption criteria and are sold for one non-itemized price, sales tax applies to the entire price; however, if the nontaxable and taxable items are stated separately, then the exemption can be applied accordingly.
- Coupons or discounts offered that reduce the price of an otherwise taxable item to $500 or less will result in the item qualifying for the exemption, except when the retailer accepts coupons where they are reimbursed by a third party (e.g., manufacturer’s coupons). Rebates are not considered as being a coupon, since rebates are made after the sale is consummated.
- Rain checks on items obtained during the holiday must be redeemed before the holiday ends for the exemption to apply.
- Any services sold with an item costing $500 or less must be separately stated on the invoice for the exemption to apply.
- Items priced at or below $500 and sold outside traditional brick-and-mortar stores (i.e., over the internet) and delivered to an Ohio address qualify, so long as the order is accepted and paid in full during the holiday period, regardless of when it is ultimately delivered to the customer.
- Shipping charges are normally taxable in Ohio, but each item in a shipment that qualifies for the exemption will result in exemption from sales tax on the shipping charges; for items that don’t qualify that are in the same shipment, shipping charges must be prorated and sales tax charged accordingly.
- With items sold under subscription services of tangible property (e.g., weekly and monthly meal deliveries), any payments made for the subscription service during the sales tax holiday are exempt, so long as the periodic payments are at or below the $500 threshold.
- Rentals of items (other than titled motor vehicles or watercraft) are exempt from sales tax, so long as the rental agreement begins during the tax holiday period.
All items that fall under the exemption during the sales tax holiday must be reported on Ohio’s sales and use tax return as part of the gross sales on the first line and then subtracted with any other exempt sales (such as sales to nonprofits and government agencies) on the next line to arrive at net taxable sales for the period.
For more questions about the 2025 Ohio sales tax holiday, please contact your CBIZ tax professional.
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