What does that have to do with Target per se? In NYS at least, the only factor is the type of product you're purchasing, nothing to do with where you buy it (CMIIW). So, I don't see how this is a "perk", or unique to Target.
I don't know about NYS, although I am pretty sure, it works irrespective of state, as it is based on TG's computer system. Have you tried to purchase an item that would be free with a TG coupon and still gotten charged tax?
When a TG coupon is used to get an item for free, there is no tax (because of the way the store coupon is treated in the internal computer system).
However, if you use a manufacturer coupon for the same amount, you will usually have to pay tax (again, because although the item is free, the taxable amount is still due). No big deal, just a useful side point.