As 25 states expand sales tax holidays into new categories, Avalara automates compliance across thousands of changing tax rules
DURHAM, N.C., Aug. 13, 2026 /PRNewswire/ — Sales tax holidays have evolved from occasional back-to-school events into year-round compliance challenges for retailers. According to Avalara’s 2026 Sales Tax Holiday Tracker, approximately 25 states will hold one or more sales tax holidays this year, up from about 15 in 2020, with additional holidays still possible as legislative sessions continue.
Today’s sales tax holidays extend well beyond clothing and school supplies. States now exempt products ranging from groceries and outdoor recreation equipment to firearms, while many have expanded both the duration and scope of these programs. Florida’s hunting, fishing, and camping tax holiday, for example, runs for four months beginning in September.
The growing complexity is creating challenges for retailers. A 2024 Avalara survey found that 73% of small and midsize retailers reported difficulty keeping up with sales tax holiday changes, and the landscape has only become more complex since then.
“Sales tax holidays used to be a predictable back-to-school event. Today they’re a year-round compliance challenge,” said Scott Peterson, Vice President of Government Relations at Avalara. “A retailer selling in Texas, Missouri, South Carolina, and Virginia may be managing different rules, dates, and product exemptions at the same time. Automation helps retailers stay compliant without adding operational complexity.”
Automating Sales Tax Holiday Compliance
Avalara AvaTax automatically applies sales tax holiday rules across more than 12,000 U.S. sales and use tax jurisdictions. Instead of manually updating point-of-sale systems or toggling exemptions on and off, retailers can rely on Avalara AvaTax to apply the correct exemption based on the applicable holiday, product category, and price threshold. Once products are mapped to the appropriate Avalara tax codes, AvaTax manages the rest.
“Whether it’s a weekend back-to-school holiday or a four-month outdoor recreation exemption, AvaTax helps retailers keep up with changing tax rules,” Peterson said. “With more than 121,000 U.S. sales tax holiday rule updates in 2025 alone, automation helps reduce the risk of incorrect tax collection, missed exemptions, and audit exposure.”
Learn how Avalara AvaTax for retailers automates sales tax holidays, tax-free weekends, and more at avalara.com/retail.
About Avalara
Avalara is the agentic AI platform for global tax and compliance. For more than two decades, Avalara has built one of the most expansive libraries of tax content and integrations in the industry, processing more than 54 billion transactions annually and supporting millions of businesses worldwide. The company’s purpose-built AI agents automate end-to-end compliance with greater precision, from tax calculations and return filings to exemption certificate management and beyond. For more information, visit Avalara.com.
SOURCE Avalara, Inc.