SIOUX CITY | Northwest Iowa retailers anxiously await the annual sales tax holiday.
"For us, we always think of it as the official start to back-to-school season," said Kris Walter-Wenell, director of marketing and business development for Southern Hills Mall. "You just see a lot of people out and they're buying."
The once-a-year chance for shoppers to expand their wardrobes without also filling government coffers typically draws large crowds to retailers both big and small.
This year's extravaganza kicks off at 12:01 a.m. on Friday, Aug. 2, and continues through midnight, Saturday Aug. 3. During the two-day period, Iowa law requires retailers to waive sales tax on most clothing and shoes priced below $100.
Back in 1999, state lawmakers approved the shopping spree to give families a break as they purchased back-to-school clothes. But you don't need school-age children to take advantage. Retailers say the tax-free weekend also appeals to adults looking for good deals on apparel.
"We're not a huge back to school destination, but we sell a lot of boots and work wear and jeans and gloves that weekend," said Torrey Wingert, vice president and chief financial officer for Sioux City-based Bomgaars, which operates a chain of stores in six states, including Iowa.
The exemption applies both to the state sales tax of 5 percent, and any local option sales tax. In Woodbury County, for example, the respective city and school districts each levies a 1 percent tax. With the holiday, a shopper can save a total of 7 percent, or $7, on a item priced at $100.
Past tax-free holidays have pumped up sales for everyone from big-box retailers to mom-and-pop stores. Some merchants retailers reported increases of 20 to 30 percent, compared to sales for a typical August weekend.
The 2012 sales tax holiday was the first for Alainn, a women's clothing store that opened a year earlier at 411 Pearl St. in the Historic Pearl Street District. Because her store is not geared for back-to-school shopping, owner Kelli Engel said she didn't know how much extra traffic to expect. She was pleasantly surprised.
"We were pretty busy," Engel said. "We had really, really good sales."
Brick and mortar stores say the holiday also helps them better compete with online retailers that are not required to collect state sales tax on transactions.
The temporary tax exemption also gives shoppers from neighboring northeast Nebraska and southeast South Dakota another reason to shop at stores in neighboring Sioux City.
"We get a lot of cross-over traffic from those states," Walter-Wenell said.
To give shoppers even more incentive to shop that weekend, many retailers offer in-store sales and promotions beyond waiving the sales tax.
Bomgaars, for example, advertises 18 percent off all clothing and footwear, Wingert said. Added to the 7 percent sales tax, that brings the total savings to 25 percent.