Two ways to exempt a backpack in Connecticut — Wacky Tax Wednesday

• Connecticut Public Act No. 26-68 made backpacks eligible for the state’s annual sales tax holiday and created a permanent sales tax exemption for “nonelectronic school supplies” — including backpacks.
• The Connecticut Department of Revenue Services provides guidance, but it leaves room for doubt.
• Retailers need to update tax point-of-sale systems to comply with the new requirements. Automating tax compliance can help businesses comply with conflicting sales tax guidelines.

Public Act No. 26–68 established two separate exemptions for backpacks: one temporary, one permanent.

Section 262 (page 402) repeals Section 12-407e of the general statutes and replaces it with the following. The underlined bits are new.

“From the third Sunday in August until the Saturday next succeeding, inclusive, [sales and use tax] shall not apply to sales of any article of clothing or footwear, including cleated shoes, intended to be worn on or about the human body or to any backpack, the cost of which article or backpack to the purchaser is less than three hundred dollars.”

 

This suggests backpacks and cleated shoes are subject to Connecticut sales tax for the remainder of the year. However, Section 272 (page 432) of Public Act No. 26–68 adds the following sales and use tax exemption to CT Gen Stat § 12-412.

(NEW) (128) Nonelectronic school supplies, such as backpacks, lunchboxes, notebooks, pens and pencils, crayons, rulers and paper. (Emphasis mine.)

 

This new, permanent exemption for backpacks and other nonelectronic school supplies applies to sales occurring on or after July 1, 2026.

How could both a temporary exemption and a permanent exemption for backpacks end up in the same bill? The legislative process offers some insights. According to the Connecticut General Assembly, there were five versions of the bill that became Public Act No. 26–68.

1. The initial proposed bill doesn’t mention backpacks, but it seeks to establish a sales and use tax exemption for clothing costing under $100, school supplies, and appliances, and to eliminate the additional 1% sales and use tax on meals sold by grocery stores.
2. The committee bill includes an exemption for “nonelectronic school supplies, such as backpacks, lunchboxes, notebooks, pens and pencils, crayons, rulers and paper.” It also provides an exemption for clothing or footwear costing less than $100, and for certain Energy Star products purchased for residential use. And it would repeal the state’s annual sales tax holiday (Section 12-407e).
3. The Finance Committee’s joint favorable bill has the sales and use tax exemption for “nonelectronic school supplies,” the exemptions for clothing and footwear priced under $100 and Energy Star products, and the repeal of the annual sales tax holiday.
4. Like the two prior versions, File No. 692 exempts clothing and footwear priced less than $100 and Energy Star products and repeals the sales tax holiday. But on the last page, in the “Related Bills” section, it notes that two bills favorably reported by the Finance, Revenue and Bonding Committee — sHB 5443 and SB 84 — expand the sales tax holiday to backpacks and raise the sales tax holiday price cap from $100 to $300.
5. The fifth and final version of the bill, which became Public Act No. 26-68, does not include the proposed exemptions for clothing or Energy Star products. It does include the new tax exemption for nonelectric school supplies, “such as backpacks.” And it makes “any backpack” priced less than $300 eligible for the annual sales tax holiday.

It seems like this oversight could have been avoided by running the bill through an editorial team.

“Usually when a state adds an item to a sales tax holiday, the intent is to give consumers a meaningful break at the right moment,” says Amanda Denniston, Government Relations Manager at Avalara. “But in this case, the same legislation that added backpacks to Connecticut’s annual holiday also made them permanently exempt from sales tax year round. For consumers, the holiday is simply redundant.” 

“It’s hard not to conclude that the backpack addition to the holiday wasn’t fully vetted before the bill was enacted,” Denniston adds. “This is exactly the kind of oversight that creates real compliance confusion for retailers trying to do the right thing.”

Faced with conflicting information in the bill, we turn to the Connecticut Department of Revenue Services for guidance.

The Sales and Use Tax Information page notes that there’s a new exemption for nonelectronic school supplies (“See PS 2026-1”), that backpacks and cleated shoes now qualify for the sales tax free week, and that the sales tax holiday threshold increased from $100 to $300.

PS 2026-1 explains that nonelectronic school supplies are exempt from Connecticut sales and use tax when purchased for a nonbusiness purpose. It notes that the term nonelectronic school supplies “is not defined in Conn. Gen. Stat. § 12-412(128) or elsewhere in state statute.” So, for administration purposes, the department has determined that nonelectronic school supplies “mean and include those items normally used by a student in a course of study to the extent that these supplies are not electronic.”

The policy statement contains a list of exempt “nonelectronic school supplies.” Backpacks are not on the list, and whether the list is intended to be all-inclusive is unclear. There’s no mention of the fact that Public Act No. 26–68 gives “backpacks” as an example of nonelectronic school supplies.

The 2026 Connecticut Sales Tax Free Week webpage points out that the price cap is now $300. It doesn’t mention backpacks but directs taxpayers to this page, where “Backpacks” are listed as an example of clothing or footwear that’s exempt when sold for less than $300.

That seems to be the answer we were looking for. But diapers are also on that list — and all diapers have been tax free in Connecticut since July 1, 2018.

I guess further study is in order.

In most states with a sales tax, the legislature can change sales tax laws with a flick of the proverbial pen, some yes votes, and the governor’s approval. It’s an awesome responsibility; one I presume lawmakers take seriously.

Oversights happen, of course. When they do, they can wreak havoc on businesses required to comply with sales and use tax laws.

If retailers charge customers sales tax on backpacks that should be exempt, they could face a PR nightmare, a class action lawsuit, or other unpleasant consequences. If retailers fail to collect sales tax on taxable backpacks, they could be held liable for the uncollected tax, plus applicable penalties and interest. So, please, states: Take care to make sales tax requirements clear.

In the meantime, Avalara Agentic Tax and Compliance™ solutions help retailers comply with sales and use tax obligations nationwide and stay at the head of the compliance class. Visit avalara.com to learn more.