If you’ve been following this blog, you know how much I love a good deal. So when I finally decided to upgrade my iPhone 4 to a Samsung Galaxy S3, I remembered a tip that Amazon wireless has no sales tax on smart phones. If you’ve ever bought one of these suckers, you know how outrageous the taxes can be. When you buy the phone in store, the phone only costs $200(since the price is subsidized by the carrier), but you have to pay tax on the full price of the phone(over $500). That’s over $50 in taxes, yikes!
So when I logged on to Amazon wireless to upgrade my phone, I was shocked to see $50+ in taxes when I tried to checkout. Unfortunately, the free ride at Amazon is now over for me and many other California residents. I’ve been saving over 8% on all my Amazon purchases for years but it looks like that’s finally coming to an end.
On September 14th, Amazon started charging sales tax on all purchases in California. If you live in a state with no sales tax, you’re still ok, but it’s only a matter of time before residents of all tax paying states will have to pay tax on Amazon purchases. It’s expected that Amazon will generate over $100 million in tax revenue for local and state governments in California. I’m not sure what California with do all that money, but I’m sure it will go to a good cause(not!).
Is Amazon Still Worth It?
So now I have to decide if it’s still worth it to do the majority of my shopping on Amazon. With no sales tax and a recent slew of Amex promotions, I was getting close to 20% off all my purchases plus free 2 day shipping to my house. There’s nothing like coming home to a giant box of paper towels. But in all seriousness, I buy almost all of my non-perishable household items on Amazon. I may be able to get comparable deals through extreme couponing or deal hunting but I like doing other things with my free time.
I know Costco offers a lot of the same items I used to buy on Amazon but I think my local Costco might be the busiest one in SoCal. I can’t go during the week days because of work, and when I go in on weekends or after work it’s a freaking mad house. I love those free samples but I think I’ve been spoiled for so long by Amazon, it’s going to be hard to go back and wait in those long lines. Even though Amazon wasn’t always the cheapest, the convenience factor of ordering on Amazon was what I loved most. Now that there is sales tax on Amazon I’ll have to pay even more and I’m not sure the convenience factor outweighs the cost.
There’s Still Amazon Prime
Now that the sales tax loop hole has been exposed, Amazon’s best feature has got to be their Prime Membership. It offers free two day shipping on all Amazon items and unlimited streaming of thousands of tv shows and videos among other benefits. If you are a student, you can actually get a free 6 month membership. For everyone else, I’d recommend signing up for Amazon Mom, it gives you a free 3 month membership to Amazon Prime.
I’ll most likely use a combination of shopping on Amazon, Costco and at my local grocery stores for whatever I need. You can still buy 3rd party items and not have to pay sales tax but not all of these items offer prime and some are used/like new condition.
Amazon still has some of the best customer service and return policies around though. You can usually get a hold of a representative by phone or e-mail very quickly and they are very knowledgeable. I’ve had some great experiences with their customer service staff and I really like their business model and how they treat their customers.
I think it will be a while before I discover what the price difference is that will make me get off my lazy butt and go out to the store to get whatever I need. But until then, I still have my free 2 day shipping and a few Amazon gift cards left to spend 🙂
Readers, do you plan on spending more, less, or the same amount at Amazon now that there is sales tax? Are there any other good options other than Costco?
Track All Your Accounts With Personal CapitalPersonal Capital lets you see all of your accounts in one convenient place. Sign up now for free.
-Harry @ PF Pro