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Taxes and Fees Soar on Wireless Bills

By October 16, 2014News

cell-phone-bill-mostly-taxes-and-feesTrying to make sense of your phone bill can sometimes feel like a mental exercise in decoding a secret language. With 9-1-1 fees, franchise taxes, utility sales and mystery charges such as MCTD, PUC and TRS, it can be a bit confusing. According to a new report from the Tax Foundation, don’t expect it to get any easier.

The average customer pays approximately 17.1 percent of their total bill in federal, state and local taxes and fees. Other, not-so-lucky states have seen average charges as high as 24 percent of the total statement, the Tax Foundation report found. It gets worse. Some city residents in Chicago have seen their bills go as high as 35 percent due to per-line fees and other miscellaneous charges.

Over all, wireless customers are seeing more of their hard earned cash be paid towards tax and fee rates that are about twice as much as the average amount of sales tax on other goods and services. To give an idea of the breakdown, about 5.82 percent is the federal charge, including excise tax and Universal Service Fund charge. Beyond that, the remainder of your fees is determined on where you live.

The states with highest combined total state and local tax rates are found in Washington state at 18.6 percent, Nebraska with 18.5 percent, New York with 17.7 percent, Florida with 16.6 percent and Illinois totaling 15.8 percent. After state and local, tack on a federal government levy and your total taxes and fees make up 22 to 24 percent of your bill in these states.

People living in cities tend to get hit the hardest. For example, New York City, Omaha and Chicago see a significant difference. Of the three cities, Chicago comes in on top where the average total of tax, fees and charges comes in at 35.4 percent.

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