Smart TaxesSmart Taxes

10 states with astronomical cellphone taxes

Nebraska tops the list, with total taxes of 23.69%. Oregon has the lowest rate, 1.81%.

By Kay Bell Feb 23, 2011 6:40PM

Just how much do we love our cellphones? 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 cellphone 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%, says the Tax Foundation, with state-local charges accounting for 11.21% 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 cellphone tax list?

 

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

 

Here are the top 10 highest cellphone taxing states, with their combined average federal, state and local cell phone tax rates:

  • Nebraska, 23.69%
  • Washington, 23%
  • New York, 22.83%
  • Florida, 21.62%
  • Illinois, 20.90%
  • Rhode Island, 19.67%
  • Missouri, 19.28%
  • Pennsylvania, 19.13%
  • Kansas, 18.39%
  • Texas, 17.48%

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

 

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 cellphone users a monthly $3.50 per line tax.

 

And where is making a mobile call not so costly? Head west, cellphone users.

 

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

 

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

 

You can find cellphone 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 cellphone tax data.

 

A confusing tax burden

 

"Cellphone 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 cellphone 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 cellphone taxes. It's usually titled something along the lines of the Cellphone Tax Moratorium Act. However, it's never moved very far in the legislative process.

 

If you have enough free minutes left on your cellphone plan, call your representative and senators and encourage them to finally do something about these taxes.

 

More from Don't Mess with Taxes and MSN Money:

 

VIDEO ON MSN MONEY

16Comments
Feb 24, 2011 7:46PM
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NYS 3rd highest in cell phone taxes by states. Not much difference from 1st place. Almost 23%. Near top on all taxes in this state.  I going to get a Magic Jack for land line. Than go with limited service plan on cell. To hell with these companys.

Feb 26, 2011 4:54AM
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i wonder if i can open a cell phone account in say Nevada and use my Texas home address
for billing and still get their 2 percent tax rate instead of Texas 17 and one half tax rate ?


Mar 1, 2011 11:54PM
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Note to Charles Camp about getting an out of state phone at a lower tax rate.

Well it depends... if the taxes pertain to the monthly subscription fee and *not* where the actual calls originated, then yes. Here is something to sweeten the deal...
Use Google Voice. You can now transfer your existing cell phone number to them as if they were a cell phone provider. Google Voice allows you to forward all calls to any number you specify. The other features of Google Voice are all staggeringly impressive where call logging, call filtering, SMS messaging, and call screening are concerned. And best of all... Google Voice is completely *FREE* (last I checked anyway). Read entire comment for More details.

So buy your phone and service in another state; provided the service is good nationwide AND you have a legal address in that state you can use as the billing address (perhaps a P.O. box depending on the service, or a relative in that state). Transfer your existing cell number to Google Voice and then forward all calls to your new out of state phone. Everything works behind the scenes and is completely transparent to anyone who calls you.

No I don't represent Google in any official way, nor do I agree with all of their tactics or policies... but I'll use this service for this purpose for as long as it profits me to do so, and as long as I'm not breaking any state or federal law in doing so.

Feb 27, 2011 10:45PM
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Wiseshopper, if you can live without a cell phone or computer then you can live without a TV too!  
And I'm also wondering if someone in a high cell phone tax state can just get a phone # from an area code in a low cell phone tax state.
Feb 28, 2011 9:03PM
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I was shocked, SHOCKED I tell you.   Communications companies have been taken to task to make their billing easier to read, then Texas goes and sues Sprint for telling their customers exactly what kind of a royal you know what the state is doing to cell phone taxes.

 

Carolyn,  I agree, we could all live without a cell phone, computer, TV, central air, running water and indoor plumbing.  But no way am I going to move someplace where I have to use an outhouse!   For most of us, we simply have to put a priority on some of life's nonessentials and forgo some luxuries.

Mar 23, 2011 8:32AM
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Okay, so you included the federal taxes of 5.05% with the highest states but not with the lowest states. The difference is big enough in a fair comparison so there's no need to use deceptive practices to make it look even bigger. If you want a fair comparison, add 5.05% to the lowest tax rates.
Mar 2, 2011 7:44PM
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Unbelievable...and that's why you need to shop around for a decent cell service provider but at a lower price, as to offset the taxes. I already got rid of my land line for starters and I'm all on board for leaving the cable world. I also am on Straight Talk wireless, with their unlimited plan. That has already cut those expenses in half.
Nov 13, 2012 4:55PM
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PARK AVENUE: Money, Power and the American Dream
Mar 2, 2011 3:15PM
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I think you can Charles Camp. I only say that because when I first got a number, I lived in Maryland Heights, MO (a suburb of St Louis). I then moved to St. Charles, MO. I didn't pay much attention to my cell bill as it didn't change any. Well one day I got a bill that was wrong. As I was reviewing it to discover the source of the problem (my sprint-to-sprint got removed from my plan on accident when I updated my phone and it caused me to go WAAAY over my minutes which Sprint quickly corrected), I noticed a line item for Maryland Heights city taxes even though I hadn't lived there for a couple years. My number was somehow still attached to that city even though I didn't live there. The only question for you is that this isn't a move. You want a number number attached to some place you have never lived. I'm not sure they can do that but I know it can happen if you move.
Aug 24, 2012 12:31PM
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go with a prepaid plan instead of the postpaid plans.  tmobile has pretty good prepaid plans.  you can buy the monthly refills online and have them automatically loaded onto your phone.  For example my wife and I have the $30/mo 5 gb plan with 100 minutes phone and we pay $30.  No taxes, fees or anything more.  $30.  Actually only about $29 as the place I buy from gives discounts from the face amount of about 3%.  callingmart.com
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In Washington state my phone tax rate is normally 39% (that's not a typo; $1.95 tax on a $5 bill).  The E911 taxes are a fixed amount so my low phone bill really bumps up the percentage.  It's insane.

One month my tax rate was 44.4%!


Jul 1, 2013 9:18PM
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now days you fart , you get taxed

that's bad for the environment so let's tax your ****

 

 

Mar 24, 2011 6:51PM
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WiseShopper:  You have it completely wrong.

 

Televisions are measured in lines of resolution, like 1080 and 720.  The measurement dpi is for printers, and stand for dots per inch.

 

720p, 1080i, and 1080p are ALL considered HD.  Many TV programs are in 720p.  Some are in 1080i.

 

There have been over-the-air broadcasts for HD for years.  Buy an antenna.  Or get cable.

 

People want the internet.  People want cell phones.  If they are willing to pay, then they are going to buy it.  Don't like it?  Tough.

 

Don't have any friends calling you on your cell phone?  Tough.

 

According to you, any technology that is not NEEDED should not be purchased.  This is not an opinion shared by the service-based economy we live in.  Tough.

 

Now go eat your bologna sandwich, turn off all you lights, count the pennies you are saving every day by not having anything of a social life, and die.

Feb 27, 2011 12:21AM
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If you did not have a cell phone in 1980 and you were able to live then why does anyone need one today?  I remember when only doctors had pagers or they would call nto their office to let someone know what house they were going to visit next.  Having a cell phone and the monthly fees is money poorly spent.  One does not need a cell phone to live nor does anyone need cigarettes or beer or wine or mixed drinks to live. We do not even need a laptop computer or a desk top computer nor do we need the internet service provider.  If you are hooked on the internet go to the public library and use it for free and while there you won't be able to be tempted to spend any money on things you can live without.  As far as Cable TV goes I bought a 47 inch Visio and then found out there is not any programming in HDTV.  Its only in 720dpi which is not high definition.  We wont see high definition programming for a number of years.  Do I click on the so-called high definition channels?  Nope.  I still click on the same old channel numers for local TV i had before they made everyone swith to a digital signal.  I have a 32 inch Panasonic TV , A tube type and it gives a better and brighter picture than these "so-called" flat screen LCD TVs.  I find i still watch the local TV stations which i could do for free and the only cable channels I watch are history and nat geo and two others and yet all they do is keep repeating the same programming that I have seen already.  I have a pay as you go cell phone which I might use once or twice a month and I have a free cell phone from my daughter , yet I have used it only three times in four months.  I would rather buy gasoline and shop at Aldi's for food than spend what i have been spending on things I do not get anything out of.
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