What is a tan?

When your skin gets darker.

No, I mean for purposes of the tanning tax, what’s a tax?

The health care reform package created several new taxes, many of which phase in over time. However, the tanning tax became effective immediately, back in 2010.  Here are the answers to some frequently asked questions about the tanning tax.

According to the IRS, a taxable indoor tanning service is a “service employing any electronic product designed to incorporate one or more ultraviolet lamps intended for the irradiation of an individual by ultraviolet radiation, with wavelengths in air between 200 and 400 nanometers, to induce skin tanning.”

Are there any tans, tanning services, or tanning products which are exempt from the tax?

Phototherapy is exempt from the tax if it is performed by a licensed medical professional.  Phototherapy is done in the treatment of a specific list of diagnoses including seasonal affective disorder, neonatal jaundice, and sleep disorders.  To be exempt from the tanning tax, the phototherapy must be performed at the professional’s office – it can’t be done at your home or any other location.

In addition, there is no tanning tax on spray tans or suntan lotions (but you’ll probably pay your regular state and/or local sales tax on the purchase).

There is some good news. There’s still no tax for tans earned the old-fashioned way–at the beach.  Not yet, anyway.

How much is the tanning tax?

The tanning tax is 10% of the amount charged for the tan.  So if you pay $25 for a tanning service, the tax is 10% of $25, or $2.50.

How do you pay the tanning tax?

Similar to a sales tax, you pay the tax at the time you buy the service.  The tanning tax simply increases the amount you owe for the tan.

What if I wasn’t charged the tanning tax?

It’s possible that the salon owner decided to include the tanning tax in the price you paid for your tan.  Regardless, the tanning tax will be ultimately paid to the IRS by the tanning salon owner; you, as the individual recently bronzed, have no responsibility for this tax after you walk out of the building.

Why is there a tanning tax?

The tanning tax was created for two commonly stated reasons. First, to provide additional revenue to the government for the specific purposes of paying for health care reform. Second, to provide a negative incentive (didn’t burn the “New Jersey Tanning Mom”) for the use of tanning salons, as there have been studies showing their use has long-term harmful health consequences.  Of course, these two goals work against each other somewhat; since the use of tanning has gone down somewhat due its increased cost, the amount of revenue raised for health care reform has fallen quite short of budget estimates.

Will the tanning tax be repealed?

Although there have been efforts to repeal the tax, repeal’s near-term passage is quite unlikely given our divided Congress. Of course, should the U.S. Supreme Court find the Health Care Reform Act unconstitutional, one possibility is that it would throw out the entire law, presumably including the tanning tax.

Happy summer!

If you travel by air, you’ll pay even more, thanks to a variety of air transportation taxes. There’s a 7.5% tax on the base ticket price, a domestic segment tax of $3.70 per person per segment (a single takeoff and single landing), an international travel facilities tax of $16.30 per person for flights that begin or end in the U.S.and $8.20 per person for a flight that begins or ends in Alaska or Hawaii.  If you are shipping anything, be sure to tack on 6.25% for a tax on transporting property by air.

Your destination airport can tack on taxes as well.  If you are going to New York via JFK airport, you’ll pay much more in taxes than those traveling to Washington DC.  Taxes at JFK average over $36, compared to less than $20 at Washington’s Reagan National airport.

You won’t escape taxes by driving – quite the opposite, I’m afraid. In 2011 motor gasoline taxes averaged 48.1 cents per gallon, including a federal tax of 18.4 cents per gallon.  As if that weren’t enough, there are a few states and municipalities that charge sales tax on top of the excise taxes.

You’ll pay the most if you fill up in California(67.7 cents) and the least in Alaska(26.4 cents), though that’s quite a distance to travel for a tank of gas for most Americans. Another low tax state includes New Jersey at 33 cents or less.  Fill up in New York or Hawaii and expect to pay about 68 cents a gallon in taxes.

Taxes for other travel expenses also vary from city to city. If you are spending a couple of nights in Chicago, expect to pay a whopping $101 in taxes for hotel, rental car and meals. Want to cut that amount in half?  Spend the weekend in Portland for just $52 in taxes, or for just a few dollars more in taxes visit Fort Lauderdale, Honolulu and Detroit.

Taxes will continue to increase, I’m afraid. More cities, counties and states are looking to raise taxes on hotel rooms as they battle budget shortfalls and cuts in services. Traditional low-tax destinations such as Baltimore, Scottsdale (AZ), Santa Clara (CA) and Connecticut have increased taxes recently or are considering it.

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