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Wireless phone taxes continue to climb

October 24, 2021
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A cell phone provider's television ad that's on heavy rotation here in the Austin area touts that it has no added fees or taxes.

What it really means is that those charges, aside from sales tax, are included in the price of whatever company plan you choose, rather than listed as separate line items in your monthly bills.

So, despite that Mad Men-style ad sleight of hand, you're going to pay taxes, fees, and state and local government surcharges for your mobile phone services.

And you're paying more than ever toward these amounts.

Taxes and fees keep climbing: A recent Tax Foundation analysis found that those taxes and fees on the typical American wireless consumer increased in 2021 to a record 24.96 percent.

This is the fourth consecutive year that the assorted charges have increased, notes the Washington, D.C. nonprofit tax policy group.

In dollars, that means a typical American household with four cell phones on a family share plan costing $100 per month would pay nearly $300 per year in taxes, fees, and government surcharges in 2021, write Scott Mackey, managing partner with Leonine Public Affairs LLP, and Ulrik Boesen, Senior Policy Analyst, Excise Taxes, for the Tax Foundation.

That's up from the $270 in such charges last year.

Overall, say the pair, wireless subscribers will pay approximately $11.3 billion in taxes, fees, and surcharges. Nationally, these amounts account for the previously mentioned record 24.96 percent combined levy on taxable voice services.

All those percentages and dollar amounts rival most wireless companies' convoluted bills. But for this weekend's By the Numbers [dis]honor, I'm going with the almost 25 percent annual increase in cell phone service taxes.

National wireless taxes overview: The study found that Illinois has the highest wireless taxes in the country, at 34.56 percent.

The other top five in the cell telephone tax area are Arkansas at 32.04 percent; Washington at 31.81 percent; Nebraska at 31.36 percent; and New York at 30.73 percent.

The Tax Foundation map below shows how each state stacks up when it comes to cell phone taxes.

Cell-Phone-Taxes-Fees-2021-by-State_Tax-Foundation

Taxable telephone services are cheaper: The one bit of good news is that the taxable telephone services themselves have become more affordable, relatively speaking, of course.

The per-line price for wireless service continues to fall, according to Mackey and Boesen. Over the last five years, the average monthly revenue per wireless line has gone from $41.50 per month in 2017 to $35.31 in 2021.

For most of us that means our higher cell phone taxes are offset by the services' lower prices.

Personally, I haven't seen this price drop from my cell service. So as soon as I post this, I'm starting my search for a potentially cheaper wireless provider.

You also might find these items of interest:

 

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TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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