#IRSS TAXES PHONE SERIES#

Flat rate impositions, such as a $1.00 per month/per line 911 fee, are converted to a percentage using the average monthly industry revenue per line as tracked by CTIA-The Wireless Association.Īs a result of changing product offerings, this report includes an alternate calculation. The methodology, originally developed by the Council on State Taxation (COST), compares the percentage rates of the taxes, fees, and government surcharges imposed on taxable wireless service.

#IRSS TAXES PHONE SERIES#

This is the twelfth in a series of reports tracking the taxes, fees, and government surcharges imposed on wireless voice service by federal, state, and local governments since 2003. As has been the case in the last three years, the FUSF increase, from 9.8 percent in 2020 to 11.8 percent in 2021, drove most of the overall growth in wireless tax rates. This total includes state and local taxes averaging 13.16 percent and the federal Universal Service Fund (FUSF) rate of 11.8 percent. Taxes and fees on the typical American wireless consumer increased again this year, to a record 24.96 percent.

The regressive nature of wireless taxes creates significant burdens on low-income consumers. At the end of 2020, about 74 percent of low-income adults had wireless as their only phone service and 65 percent of all adults were wireless-only.However, during this same period, wireless taxes, fees, and government surcharges have increased from 15.10 percent to 24.96 percent of the average bill. Since 2008, the average monthly wireless service revenue per subscriber has dropped by 30 percent, from nearly $50 per line per month to $35.31 per line.Without this federal prohibition, taxes and fees that apply to wireless voice services could be applied to internet access and significantly increase the tax burden on wireless bills. The federal Permanent Internet Tax Freedom Act prevents state and local governments from imposing taxes and fees on wireless internet access.Illinois continues to have the highest wireless taxes in the country, at 34.56 percent, followed by Arkansas (32.04 percent), Washington (31.81 percent), Nebraska (31.36 percent), and New York (30.73 percent). Nationally, these impositions make up a record 24.96 percent tax on taxable voice services.

This year, wireless subscribers will pay approximately $11.3 billion in taxes, fees, and government surcharges to state and local governments.

A typical American household with four cell phones on a “family share” plan, paying $100 per month for taxable wireless service, would pay nearly $300 per year in taxes, fees, and government surcharges-up from $270 in 2020.