‘Can you hear me now?’ Your cell phone’s state and local taxes are huge!

February 22, 2011

Just how much do we love our cell phones? So much so that, in most places across the United State, we're willing to put up with astronomical taxes to stay connected.

An analysis of cell phone taxes by the Tax Foundation finds that the levies on the devices are significantly higher than many other common consumer items.

And while we tend to complain about the IRS, in this case the tax damage is more local.

The average U.S. wireless customer pays taxes and fees of 16.26 percent, says the Tax Foundation, with state-local charges accounting for 11.21 percent of that overall amount.

Worse, the Washington, D.C.-based tax research group found that state and local governments often hide or obscure the fees. In fact, my home state of Texas even sued Sprint because the company listed a state tax as a line-item in its bill, rather than hiding it from customers.

So where does your state rank on the cell phone tax list?

Nebraska is the biggest cell phone taxer. Its combined federal-state-local average tax rate is 23.69 percent. Four other states — Florida, Illinois, New York and Washington — have total cell phone tax rates of more than 20 percent.

The rest of the top 10 highest cell phone taxing states and localities are:

State Average State & Local Cell Phone Tax Rate Combined Federal, State & Local Cell Phone Tax Rate
Nebraska 18.64% 23.69%
Washington 17.95% 23.00%
New York 17.78% 22.83%
Florida 16.57% 21.62%
Illinois 15.85% 20.90%
Rhode Island 14.62% 19.67%
Missouri 14.23% 19.28%
Pennsylvania 14.08% 19.13%
Kansas 13.34% 18.39%
Texas 12.43% 17.48%

Overall, 23 states and the nation's capital have average state-local wireless taxes and fees in excess of 10 percent.

Locally, Baltimore, Md., imposes a $4 per line per month tax on wireless users. The Charm City assessment is on top of federal and state charges. The Washington, D.C., suburb of Montgomery County, Md., charges cell phone users a monthly $3.50 per line tax.

And where is making a mobile call not so costly? Head westward, cell phone users.

Oregon's state and local tax rate is just 1.81 percent. Nevada's rate is 2.02 percent. In Idaho, cell phone users pay 2.20 in state and local taxes.

From those three low-tax states, the cell phone state and local rates jump to 6.03 percent (that's in Montana) and just keep climbing.

You can find cell phone tax rates for the 50 states and the nation's capital on page 2 of the Tax Foundation's report (PDF format). There's also an online list where you can sort the cell phone tax data.

A confusing tax burden: "Cell phone users are overtaxed relative to consumers of other goods, and at risk of double taxation," writes study author and Tax Foundation Director of State Projects Joseph Henchman. "Additionally, the wide number of taxing authorities and the wide variety in rates makes tracking problematic and burdensome."

That burden is underscored by the ability of states to raise revenue with cell phone taxes in a relatively hidden way; note my earlier mention of sneaky and litigious Texas lawmakers. 

Quick note to smartphone techie folks: I see plenty of apps for this and other state and local taxes.

Federal legislation has been regularly introduced in Congress to rein in the myriad cell phone taxes. It's usually entitled something along the lines of the Cell Phone Tax Moratorium Act. However, it's never moved very far in the legislative process.

If you have enough free minutes left on your cell phone plan, call your Representative and Senators and encourage them to finally do something about these taxes.

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Comments
  • susan

    So, how are these state and local taxes deductible?

Comments are closed.