Gimme A (Tax) Break

(FORTUNE Magazine) – What's in store for retailers this fall? Second-quarter sales were ahead of expectations, and most retailers are predicting modest growth in the third quarter. Despite high oil prices and rising interest rates, consumers with kids are still expected to shell out $483 per household this year during their back-to-school shopping sprees, up from $450 last year, according to the National Retail Federation (NRF). One wildcard is taxes: Retailers are facing tough comps, since last year at this time Bush's tax cuts were hitting consumers' pockets. While shoppers won't have that extra cash this year, some people will still get a break: A dozen states are letting consumers shop tax-free for back to school, vs. nine last year. New York was the first state to trash taxes for a week, back in 1997, and this year most of the free states are in the South and Northeast. The tax holidays last from one to nine days, depending on the state. Florida, which gave shoppers the longest exemption--nine days, ending in early August--saw sales jump more than 30%, according to the Florida Retail Federation (the NRF estimates tax holidays boost sales an average of 10% to 15%). So what will kids be buying? Electronics sales are projected to be particularly hot (up 15%) as teens snap up new iPods and other digital devices. And, we're guessing, as their parents do too.

--Julie Schlosser