Shoppers of computers, clothing, shoes and other items that fall into the state’s “back to school” category could conceivably save up to $70 in Socorro next weekend.
Start planning now to stock up on items and products to advantage of New Mexico’s annual Back to School Tax-Free Holiday. For parents of school-age children, the three-day tax reprieve is nothing short of a bonanza as the state will suspend the collection of gross receipts tax (GRT) on sales of qualifying items.
The tax holiday – set by state statute – begins at 12:01 a.m. on the first Friday in August and concludes on the following Sunday at midnight; in other words Friday, Aug. 5 through Sunday, Aug. 7 at midnight.
During that time the law provides a deduction from gross receipts for retail sales of qualifying tangible personal property; in effect, allowing the retailer to sell the items “tax-free.”
The gross receipts tax rate varies throughout the state from 5.125 percent to 8.6875 percent depending on what city or county it is. It varies because the total rate combines rates imposed by the state, counties, and, if applicable, municipalities where the businesses are located.
In Socorro the GRT is 7.6875 percent. In Magdalena, the GRT is 7.3125 percent.
School supplies for use in standard, general education classrooms must be under $30 per unit. The law specifically lists notebooks, paper, writing instruments, crayons, art supplies, rulers, book bags, backpacks, handheld calculators, maps, and globes as deductible during the tax holiday.
To qualify for the deduction, clothing or shoes must be priced at less than $100 per unit, however, accessories and special clothing or footwear primarily designed for athletic activity or protective use and not normally worn beyond the scope of the athletic activity or protective use remain taxable.
The price limit for desktop, laptop, tablets or notebook computers is $1,000, and for related computer hardware such as a monitor, speaker or set of speakers, printer, keyboard, microphone or mouse the limit is no more than $500. School supplies for use in standard, general-education classrooms must be under $30 per unit. There are items specifically excluded by statute in all categories. Those items are always taxable.
Tablet computers are nontaxable, but e-readers that do not contain computing functions such as word processing, spreadsheets, etc. are taxable.
Earbuds are still taxed. The law specifically excludes headphones, watches, radios, compact disc players, sporting equipment, portable desktop telephones, copiers, office equipment, furniture or fixtures. The law does not consider those items to be school supplies that students normally use in a standard classroom. Sales of those items are taxable during the three-day period.
An all-inclusive list of both taxable and nontaxable items can be found at https://www.tax.newmexico.gov/wp-content/uploads/2021/07/FYI-203.pdf
There are items specifically excluded by statute in all categories. Those items are always taxable.