Wireless telephone service rates have dropped 23 percent in the last 10 years, but these gains have been offset by a continued increase in taxes for the service, rising 27 percent during the same time period.
According to The Tax Foundation, a typical American household with four wireless phones pays $100 monthly for taxable wireless service. However, families can expect to pay about $229 a year in wireless taxes, fees, and surcharges—an increase from $221 in 2017.
Nationally, the taxes, fees and charges ring up to 19.1 percent of the average customer’s bill—the highest rate ever. Illinois now has the highest wireless taxes in the country at 27.6%, but New York is not far behind at fifth, with 25.2 percent.
At the end of 2017, about 68 percent of poor adults had only wireless for their phone service, and 53 percent of all adults were wireless only. Excessive taxes and fees, especially the very high per line charges like those imposed in Chicago and Baltimore, impose a disproportionate burden on low-income consumers. In Chicago, taxes on a family with four lines of taxable wireless service paying $100 per month are nearly $500 per year—over 40 percent of the bill.
Wireless consumers will pay an estimated $16.1 billion in taxes, fees, and government surcharges to federal, state, and local governments in 2018 based on the tax rates calculated in the report. These taxes, fees, and surcharges break down as follows: $6.1 billion in sales taxes and other nondiscriminatory consumption taxes, $4.9 billion in federal Universal Service Fund surcharges, $2.8 billion in 911 fees, a category that includes hundreds of millions of dollars that are not actually used for 911 purposes and $2.2 billion in other industry-specific state and local taxes and fees.