Tax-Free Weekend Not the Policy Win it Seems to Be

Arkansas schools will soon be back in session for the 2025-2026 school year. For many, the back-to-school season brings excitement, anticipation, or new beginnings. But for a growing number of Arkansas families, back-to-school requires careful financial planning and often involves hardship.  

Back-to-school spending in 2025 for K-12 and college students is expected to total between $31 billion and $38.8 billion with an average per-student spend of between $570 and $875. To counter these high costs, a record 61% of families reported they planned to begin their shopping in early July to spread out their spending.   

In Arkansas, 44% of the population either lives below the federal poverty guidelines or is considered “Asset Limited, Income Constrained, Employed” (ALICE), which means while they do not fall below the federal poverty guidelines, they struggle to afford life’s essentials. Arkansas’s ALICE percentage is the 10th highest in the nation, making back-to-school shopping particularly burdensome to Arkansans. 

Act 757 of 2011 created what is commonly known as the “tax-free weekend” or “sales tax holiday” making Arkansas one of the 21 states with such a policy. Act 944 of 2021 added electronic devices to the list of items that are tax-exempt. The law voids the state sales tax, currently 6.5%, on clothing, accessories and cosmetics, electronic devices, school supplies, school art supplies, and school instructional materials. Clothing items, including shoes, must cost less than $100 per article and accessories/cosmetics must cost less than $50. While Arkansas has updated the law to include electronic devices, the price threshold for clothing and accessories has not increased since 2011.  

Overall, the sales tax holiday is an ineffective tool for families’ financial relief. Researchers at the University of West Florida concluded that companies often absorb around 20% of the savings offered by the tax-free weekend by slightly raising prices. The existence of the sales tax holiday also encourages families to wait to purchase back-to-school clothing and supplies when demand for that merchandise is at its highest. Low-income families would generally be better off spreading out their back-to-school spending instead of taking advantage of the tax-free weekend only. The administrative burdens for small businesses and online retailers can be enormous.  

Finally, evidence suggests that tax-free weekends do not create economic growth. Instead, consumers purchase what they would have anyway, just a few weeks earlier or later. As a result of the limited tax benefit, back-to-school shopping remains burdensome for many Arkansas families and will cost the state an estimated $2.6 million this year. 

The sales tax holiday reduces state revenue, leaving fewer tax dollars to effectively assist Arkansas families with the increased cost of living.  

Some families can find additional assistance thanks to nonprofits, churches, local governments, and businesses across the state that organize school supply donation drives and giveaway events. These philanthropic events serve thousands of Arkansans and show the importance of the local community supporting its students. The following are some of the upcoming events around the state that encourage you to donate, volunteer, or attend for free school supplies and more:  

Education
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Aaron Conrad