What Ohio's supersized tax holiday will cost the state in revenue

Ohio has set aside $750 million to cover the lost tax tax revenue expected from the expanded sales tax holiday that will start this month.

The $750 million is far greater than the $20 million or so that the state typically lost from the prior, smaller three-day holidays. Those events were geared mostly to helping parents buy clothes and school supplies ahead of the start of the school year.

The expanded sales tax holiday allowed under the state budget that Gov. Mike DeWine signed a year ago extends this year to 10 days and covers most things that cost $500 or less, including dine-in food purchases at restaurants.

The exemption does not apply to services or for the purchase of watercraft, outboard motors, motor vehicles, alcohol, tobacco, vapor products or any items that contains marijuana.

The legislature wanted to make the holiday 14 days long, but DeWine vetoed that in favor of the 10-day holiday.

The holiday starts at midnight on July 30 and runs through 11:50 p.m. Aug. 8.

The $750 million will be used to reimburse the state, counties, libraries and transit authorities for their revenue losses. For this holiday, the reimbursements cannot exceed $750 million.

The prior holidays were focused on clothing worth less than $75 and school supplies and instructional materials under $20.

It's possible that there will be similarly expanded tax holidays in the future, assuming enough money is available.

The expanded sales tax holiday has been criticized by groups that believe the lost tax money could be better spent elsewhere while others say it helps families hurt by inflation.

“Ohio’s sales tax holiday, historically, has been meant to help families buy clothing and school supplies for the upcoming school year,” DeWine said in March when he announced the longer holiday earlier this year. “This expanded sales tax break will help Ohio’s families with back-to-school necessities as well as other substantial purchases during a time when so many household budgets are being strained.”

mawilliams@dispatch.com

@BizMarkWilliams