The federal tax rate on wireless service (called the USF, or Universal Service Fund) is 6.64%. Since 2008, average monthly wireless service bills per subscriber have dropped from just under $50 per line per month to $37.85 per month–a 24 percent reduction. The US average is 7.3%. Updated July 2019 by Scott Mackey, Leonine Public Affairs LLP, using state statutes and regulations. Wireless 911 fees vary greatly by state, from a low of zero in Missouri[3] to a high of $3.86 per line in West Virginia. Jefferson City (3.5%) & Kansas City (4.875%), Jefferson City (7%); Kansas City (6% residential), Washoe County = $.85 / month; Clark County no tax, Avg. As in the previous example, if a consumer has a $50 monthly wireless voice plan, 62.9 percent of that charge ($31.45) is deemed to be an intrastate service subject to the state USF charge and $18.55 is an interstate service not subject to state USF charges. Simply put, wireless infrastructure investment enables an entire entrepreneurial culture to focus on creating applications and devices to make businesses more productive and to improve the lives of consumers. There are a total of 287 local tax jurisdictions across the state, collecting an average local tax of 3.977%. Wireless consumers pay about $12.0 billion in taxes and fees that are specifically levied on telecommunications services but not on other taxable goods and services. The December 2019 total local sales tax rate was also 10.000%. Sales tax is a tax paid to a governing body (state or local) on the sale of certain goods and services. of Pierre (2.0%) and Sioux Falls (2.0%), Avg. The FCC has also recently decided to use funds to fund broadband deployment. The US average is $28,555 a year. [8] Roche, Robert F. and McNicholas, Sean, “CTIA’s Wireless Industry Indices Report,” June 2019, page 40. 1325 G St NW Wireless service is increasingly the sole means of communications and connectivity for many Americans, particularly young people and those with lower incomes. State Sales & Use Tax Rates – Alabama Department of Revenue Below, we have highlighted a number of tax rates, ranks, and measures detailing Alabama’s income tax, business tax, sales tax, and property tax systems. Tax on a Single Line Voice Plan Costing $37.85 per month. Mobile, AL Sales Tax Rate The current total local sales tax rate in Mobile, AL is 10.000%. 4 Note: Federal includes 3% federal excise tax (until 5/2006) and federal universal service fund charge, which is set by the FCC and varies quarterly: Federal USF 7/1/2019 — 37.1% Interstate safe harbor x 24.4% contribution factor = 9.05% effective tax rate. Learn more! Under the report’s methodology, a $1.00 per month per line tax is converted to a percentage amount by dividing $1.00 by the $38.66 average monthly bill, resulting in a tax rate of 2.59 percent in this example. $2.9 billion in other industry-specific state and local taxes and fees. Unlike a sales tax, a gross receipts tax is assessed on businesses and apply to business-to-business transactions in addition to final consumer purchases, leading to tax pyramiding. [8] This percentage continues to grow as wireless consumers use more internet access and less voice telephone service each year. The US average is $28,555 a year. One of the longstanding arguments for reform of wireless taxation is the disparity in tax burdens on wireless as compared to broad-based consumption taxes imposed on other goods and taxable services subject to sales and use taxes. In most of the top 10 states shown in Table 2 with the highest wireless taxes, local taxes play a prominent role. Sales Tax is imposed on the retail sale of tangible personal property in Huntsville. $5.9 billion in federal Universal Service Fund surcharges. The 7% sales tax rate in Semmes consists of 4% Alabama state sales tax, 1.5% Mobile County sales tax and 1.5% Special tax. Second, the report’s methodology understates the tax rate impact of flat rate taxes and fees–those that are imposed a set dollar amount per line. Alabama collects a 2% state sales tax rate on the purchase of vehicles, which includes off-road motorcycles and ATVs. Note:  Excludes local general sales taxes. Alabama has the second lowest average effective property tax rate in the country, and its income tax rates range from just 2% to 5%, lower than most other states that have an income tax. South Dakota v. Wayfair, Inc. 3. Help us continue our work by making a tax-deductible gift today. [9] Figure B1 below highlights the significant growth in the FCC contribution rate since 2003. This is particularly true since the Census Bureau has only been tracking the percentage of wireless expenditures on internet access since 2012, so it would not be possible to go back and retroactively adjust data prior to then. For example, when determining the FUSF, a customer with a $50 monthly wireless voice calling plan is deemed to include $18.55 in interstate calls and $31.45 in intrastate calls. On April 1, 2019, the general sales and use tax rate and the sales and use tax rate for admissions to places of amusement and entertainment will jump from 2% to 3% in the city of Evergreen, Alabama. [1] Stephen J. Blumberg and Julian V. Luke, “Wireless Substitution: Early Release of Estimates from the National Health Interview Survey, July-December 2018,” National Center for Health Statistics, June 2019, 1-3,  https://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless201906.pdf. However, rates could be higher depending on where in Alabama you live or work, as local governments can also collect income taxes ranging from 0% to 2%. In addition to 911 fees and state USF charges, 14 states impose taxes on wireless service that are either in addition to state sales taxes or in lieu of sales taxes but imposed at a higher rate than the state sales tax. Notwithstanding these methodological challenges, the authors have determined that the benefits of retaining the current methodology–consistent measurement of trends in tax rates over time–outweigh the benefits of changing the methodology to adjust to recent trends. Alabama collects a 2% state sales tax rate on the purchase of vehicles, which includes off-road motorcycles and ATVs. Suite 950 - The Income Tax Rate for Mobile is 5.0%. Appendix C provides a detailed breakdown of the specific taxes, fees, and government surcharges imposed in each state, including the respective rates of each. Source: Author’s calculation from state statutes and state utility commissions. Use Wirefly’s innovative cell phone and plan comparison tools to ensure you are getting the best deal on the market. For flat rate per line impositions, the per line rate is multiplied by the estimated number of postpaid wireless lines. Two trends in the industry are significantly impacting the amount of taxes that wireless consumers pay on their monthly bills. Wirefly offers great deals on a large selection of smartphones, cell phones, tablets, mobile hotspots, and other wireless devices for the nation's most popular carriers. [6] Economists that have examined the link between investments in communications and information technology infrastructure and economic growth have consistently found a strong link. In the late 1990s and early 2000s, when wireless service began to displace landline service, localities became concerned about losing taxes and fees from landline telephone services and sought to extend these taxes and fees to wireless services. The first step towards understanding Alabama’s tax code is knowing the basics. Table 2 shows wireless tax, fee, and government surcharge rates as of July 2019. Each state’s tax code is a multifaceted system with many moving parts, and Alabama is no exception. Wirefly helps you save on cell phones and plans by offering innovative comparison tools so consumers can make educated choices. You can print a 10% sales tax table here. In some cases, they can rival or even exceed state rates. Like the FUSF, state universal service fund charges do not apply to internet access. State USF charges are key factors in the high wireless tax burden in states like Alaska, Arkansas, California, Kansas, and Nebraska. State and local wireless taxes increased from 12.5 percent to 12.7 percent, the sixth consecutive increase. Many of these are legacy taxes and fees that were established during the regulated telephone monopoly era that existed prior to the late 1980s. To the Legislature of Alabama: This is the 26th edition of a publication that the Legislative Fiscal Office first completed in January of 1979. As noted in the ICC report, “Remedying the discriminatory tax treatment of telecom goods and services may reduce tax receipts in the short-term, but the longer-term increase in the use of advanced capability devices, service demand, and network deployment resulting from these tax reductions is likely to counteract this loss of revenue over time.”[7] Policymakers need to weigh the trade-offs between the short-term revenue benefits of excessive wireless taxes versus the long-term economic impact on the state from reduced infrastructure investment. The 10% sales tax rate in Mobile consists of 4% Alabama state sales tax, 1% Mobile County sales tax and 5% Mobile tax. States also have the authority to supplement the programs funded through the FUSF with their own programs funded through state universal services funds. Forty-five states and the District of Columbia collect statewide sales taxes. Despite the growing burden on wireless consumers, Congress has shown little interest in restricting or otherwise limiting the growth of the programs funded through the FSUF. Montgomery, Alabama 36130-3525 (334) 261-0600 . This suggests that of the “typical” consumer’s monthly expenditure of $37.85 per month, approximately $17.79 is for nontaxable internet access and $20.06 is for taxable wireless service. Second, discriminatory taxes may slow investment in wireless infrastructure. State and local sales tax rates as of January 1, 2019. California is the exception–wireless service is not subject to sales taxes but is subject to local Utility User Taxes (UUT) at rates as high as 11 percent. The state programs are funded by surcharges applied to the intrastate portion of telephone charges. Washington, DC 20005, Banner image attribution: Unsplash, Jonas Lee, Download Wireless Taxes and Fees Jump Sharply in 2019 (PDF), Tax Expenditures, Credits, and Deductions, Small Business, Pass-throughs, and Non-profits, Research & Analysis of Digital Tax Policies, Sources of Government Revenue in the OECD, Opportunities for Pro-Growth Tax Reform in Austria, Tax Proposals, Comparisons, and the Economy, http://www.usac.org/cont/tools/contribution-factors.aspx, https://www.fcc.gov/files/10thannual911feereporttocongresspdf, http://www.chicagotribune.com/news/local/politics/ct-rahm-emanuel-phone-fee-increase-met-0602-20170601-story.html, https://cdn.iccwbo.org/content/uploads/sites/3/2010/10/ICC-discussion-paper-on-the-adverse-effects-of-discriminatory-taxes-on-telecommunications-services.pdf, Carrier rates assigned by Public Service Commission, 2.4% of Interstate and Intrastate charges — also funds 911, Phoenix (Maricopa) = 0.7%; Tucson (Pima) = 0.5%, Avg. During that same period, wireless taxes increased by 2.45 percentage points–from 10.20 percent to 12.65 percent. In the case of taxes and fees that are imposed on a flat per-line basis–for example, $1.00 per month per line–the tax is converted from a flat amount to a percentage by dividing the flat amount by the industry average revenue per line of $37.85 per month. Furthermore, states like Delaware, Montana, and New Hampshire that do not impose a sales tax have specific taxes on wireless and other communications services. Sales tax is a tax paid to a governing body (state or local) for the sale of certain goods and services. [6] International Chamber of Commerce, “ICC Discussion Paper on the Adverse Effects of Discriminatory Taxes on Telecommunications Service,” Oct. 26, 2010, https://cdn.iccwbo.org/content/uploads/sites/3/2010/10/ICC-discussion-paper-on-the-adverse-effects-of-discriminatory-taxes-on-telecommunications-services.pdf. The federal tax rate on wireless service (called the USF, or Universal Service Fund) is 6.64%. Table 5 provides a breakdown of the types of local wireless taxes. The FUSF surcharge has also increased throughout the period, by 36 percent between July 2018 and July 2019. Alabama first adopted a general state sales tax in 1936, and since that time, the rate has risen to 4 … of Milwaukee (0.6%) & Madison (0.5%). Average wireless tax rates increased nearly three times faster than average sales tax rates. The methodology used in this report to calculate wireless taxes compares the applicable federal, state, and local rates on wireless voice service in the capital city and the most populated city in each state. 4. If a carrier elects to use the safe harbor, the FUSF rate would be applied to $18.55 of the bill each month. Throughout the period, state and local taxes have been trending upward steadily, from 10.2 percent in 2003 to their current level of 12.65 percent in 2019. Providers are permitted to surcharge these “contributions” on the phone bills. For over 80 years, our goal has remained the same: to improve lives through tax policies that lead to greater economic growth and opportunity. The FCC currently sets this safe harbor at 37.1 percent of the fixed monthly charge. A sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Carriers may use traffic studies to show the actual split between interstate and intrastate calls for all subscribers and apply the FUSF to the aggregated interstate portion of subscriber calls. The sales tax jurisdiction name is Semmes Pj Un, which may refer to a local government division.You can print a 7% sales tax table here.For tax rates in other cities, see Alabama sales taxes by city and county. Most states impose 911 fees to fund capital expenses associated with the 911 system, and in some states these fees fund operations as well. of Salt Lake City (2.9%) and Provo (2.4%), Avg. This Closure Is Due To Utility Work For The Broad Street Project. Alaska dropped out of the “top five” due to a significant reduction in the Alaska state universal services fund (USF) surcharge. 4% lower than the maximum sales tax in AL The 7% sales tax rate in Semmes consists of 4% Alabama state sales tax, 1.5% Mobile County sales tax and 1.5% Special tax. FUSF surcharges apply only to interstate telecommunications services. Would you consider contributing to our work? Tax Rates for Mobile - The Sales Tax Rate for Mobile is 9.6%. Most of the increase in the wireless tax burden is due to a very large (36 percent) increase in the Federal Universal Service Fund “contribution rate.” Wireless carriers are required to pay this surcharge on all charges for interstate telephone service. Many local governments also impose discriminatory taxes on wireless consumers. Start saving today with Wirefly! Wireless service is increasingly becoming the sole means of communication and connectivity for many Americans, particularly those struggling to overcome poverty. Since 2008, average wireless monthly bills have dropped from just under $50 per month to $37.85 per month–a 24 percent reduction–while wireless taxes have increased from 15.1 percent to 21.7 percent–a 44 percent increase. However, there are two compelling reasons why policymakers should be cautious about expanding wireless taxes, fees, and surcharges. Each state’s tax code is a multifaceted system with many moving parts, and Alabama is no exception. The US average is 7.3%. Alabama (AL) Sales Tax Rates by City The state sales tax rate in Alabama is … Appendix B lists the rates in all 20 states with USF charges. In Chicago, taxes on a family with four lines of taxable wireless service paying $100 per month are more than $500 per year–about 43 percent of the bill. [9] For the purposes of this report, the FCC safe harbor percentage is used. Unfortunately, according to the Federal Communications Commission (FCC), some states and localities routinely divert 911 fees for other purposes. Alaska, California, Kentucky, and New Mexico lowered the rates of their state USF surcharges. While marginal tax rates show the amount of tax paid on the next dollar earned, average tax rates show the overall share of income paid in taxes. Higher taxes on wireless service, coupled with increased taxes on wireless investments, may lead to slower deployment of wireless network infrastructure, including fifth generation (5G) wireless broadband technologies–a key element to the future success of Smart Cities, which are cities that utilize wireless communication tools to improve quality of life for its citizens. Shop with confidence knowing that Wirefly wants to help you find the best prices on cell phones, cell phone plans, TV, and Internet service. The program subsidizes telecommunications services for schools, libraries, hospitals, low-income people, and rural telephone companies operating in high-cost areas. New Hampshire, Delaware, and Montana–all states that do not have general sales taxes but impose taxes on wireless service–rank relatively high on the disparity index even though their overall wireless tax rates are relatively low by national standards. RENTAL TAX – TRANV: In addition to the rental tax rates currently displayed on our … The Tax Foundation works hard to provide insightful tax policy analysis. The sales tax jurisdiction name is Semmes Pj Un, which may refer to a local government division. A consumer applying the effective tax rates in this report to their total bill will find that the effective tax rate overstates their actual tax paid if their calling plan includes both taxable voice service and exempt internet access. However, wireless taxes have increased from 15.1 percent to 21.7 percent of the average bill–a 44 percent increase. Local sales taxes are collected in 38 states. Below is a list of state & local taxes and fees on monthly cell phone service. Income and Salaries for Mobile - The average income of a Mobile resident is $23,509 a year. Alabama first adopted a general state sales tax in 1936, and since that time, the rate … However, these flat rate taxes and fees are only permitted to be imposed on the portion of the wireless bill that is not internet access. An excise tax is a tax imposed on a specific good or activity. The December 2020 total local sales tax rate was also 10.000%. - Tax Rates can have a big impact when Comparing Cost of Living. This allows for consistent multi-year comparisons of taxes, fees, and surcharges. The popularity of wireless service, and the explosive growth in the number of wireless subscribers, has led some to question whether wireless taxes matter to wireless consumers and the wireless industry. These taxes, fees, and surcharges break down as follows: Consumers in Illinois, Washington, and Nebraska pay the highest wireless taxes in the country, while wireless users in Oregon, Idaho, and Nevada pay the lowest wireless taxes. Wireless industry competition has led to significant reductions in average monthly bills since 2008, a trend that accelerated between 2016 and 2019, when average bills dropped from $44.65 per month in 2016 to $37.85 per month in 2019. Wireless industry competition has led to significant reductions in average monthly bills since 2008, a trend that accelerated between 2016 and 2019, when average bills dropped from $44.65 per month in 2016 to $37.85 per month in 2019. First, a growing share of wireless consumer purchases is for internet access. All Rights Reserved, Find the Best Cell Phone and Plan for You, Find The Best TV and Internet Providers For You, Wirefly Is America's Most Trusted Source For All Cell Phones, Plans, TV, and Internet Deals, How To Lower Your Cell Phone Bill: The Ultimate Guide, How To Block a Phone Number from Spam/Robo Calling Your Cell Phone, Guide to Verizon Up: Verizon Wireless Rewards Program, T-Mobile Tuesdays: Everything You Need To Know, Privacy Policy | Term of Use | Contact | About Us. Fortunately for wireless consumers, price competition continues to push down the average monthly per-line cost of wireless service. List is updated every Friday for available tax liens for purchase. As noted previously, at the end of 2018, more than 67 percent of all low-income adults had only wireless service, and 57 percent of all adults were wireless-only. After deciding what to spend on the various programs, the FCC sets the quarterly “contribution factor” or surcharge rate that telecommunications providers must remit to the FUSF to generate sufficient revenues to fund the expenditure commitments. How does Alabama rank? The Tax Foundation found that Alabama has the nation’s fifth highest average combined state and local sales tax rates at 9.14 percent. Source: Methodology derived from Committee on State Taxation, “50-State Study and Report on Telecommunications Taxation,” May 2005. Taxes, fees, and government surcharges on wireless consumers increased from 19.1 percent to 21.7 percent between 2018 and 2019–a 14 percent increase in the tax rate. The County sales tax rate is %. Detailed explanation of the average customer ’ s leading independent tax policy at the same purposes as FUSF. The programs funded through state Universal services funds only to consumers and that! ( FUSF ) is 6.64 % also recently decided to use the harbor! 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