Coupons and discounts

8.1. Manufacturer's coupons do not reduce the sales price of an item. Therefore, a manufacturer's coupon cannot be used to reduce the selling price of an item to less than the applicable threshold in order to qualify for the exemption.

Example: A jacket sells for $130.00. The customer has a $10.00 manufacturer's coupon good for the purchase of the jacket. The manufacturer's coupon does not reduce the sales price of the jacket. Tax is due on the $130.00 even though the customer only pays the retailer $120.00 for the jacket.

8.2 Store coupons and discounts do reduce the sales price of an item. Therefore, a store coupon or discount can be used to reduce the sales price of an item to less than the threshold amount in order to qualify for the exemption.

Example: A customer buys a $400.00 suit and a $130.00 shirt. The retailer is offering a 10 percent discount. After applying the 10 percent discount, the final sales price of the suit is $360.00, and the sales price of the shirt is $117.00. The suit is taxable (it is over $125.00) and the shirt is exempt (it is less than $125.00).