What does your cell phone cost you in taxes and fees? According to a new report by the Tax Foundation, the average American pays about 17%.
Taxes and fees include an average of 5.82% on the federal level and 11.23% on the state and local level. The average taxes and fees for cell phone bills is twice as high as the average sales tax rate on other goods and services, suggesting the current cell phone tax rates are a bit excessive.
The five states reporting the highest local tax rates are Washington State (18.6%), Nebraska (18.48%), New York (17.74%), Florida (16.55%) and Illinois (15.81%).
The five states with the lowest local tax rates are Oregon (1.76%), Nevada (1.86%), Idaho (2.62%), Montana (6%) and West Virginia (6.15%).
Chicago, Baltimore, Omaha, and New York City have tax rates of 25% or more.
To be fair, wireless taxes and fees have gone down slightly since 2012. The average was 17.18% then, and it is 17.05% now. Nevertheless, a large portion of your cell phone bill is still made up of taxes and fees.
According to a report from the Centers for Disease Control, 41% of all adults do not have a landline phone. The figure is even higher, 56%, for low-income adults.
As the demand for smartphones, cell phones and other mobile devices continues to soar, the need to tax these services may increase. Consumers are no longer spending money on landline service, so the income that came from landline services may have to be made up in some way.