The nonpartisan Tax Foundation has released a new report on Wireless Taxation in the United States 2014. The average US wireless consumer pays 17% in combined federal, state, and local taxes and fees. Folks in Chicago, Baltimore, Omaha, and New York City have combined tax rates over 25 percent! Here’s their state-by-state map breakdown:
They also point out that these effective tax rates are much higher than normal sales tax.
Actionable advice? If your area is subject to high cell phone taxes, it may be better to switch to a prepaid plan rather than the traditional postpaid. I’m not sure exactly how these work, but somehow the taxes are averaged out and baked into the flat price. Note that depending on your area, you may still be subject to a e911 fee and sales tax. You can often bring your own off-contract phone and save even more. Most discount providers now accept phones like the iPhone and Galaxy.
I’ve heard of some people fudging their billing addresses to stay in a low cell tax state, but that may be more expensive or trouble than it is worth.