Be Aware of These Hidden Taxes at Christmas Time

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Ho ho ho. December is a time of celebration, when we spend money on gifts and decorations, holiday food and travel — and taxes. Most states impose sales taxes, making everything you buy a little more expensive. But did you know you are paying many hidden taxes as well? Here are a few.

Holiday travel. If you are traveling this Christmas, you’ll pay a lot of taxes. According to a study by the National Business Travel Association, travelers pay up to $101 in sales, hotel, rental car and other extra taxes on an average three-day trip.

These holiday travel taxes vary, depending on your destination. 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 $53 in taxes, or for just a few dollars more in taxes visit Fort Lauderdale, Honolulu or San Diego.

Airfare. If you travel by air, you’ll also pay a variety of air transportation taxes. There’s a 7.5% tax on the base ticket price. But wait, there’s more: a domestic segment tax of $4 per person per segment (a single takeoff and single landing), an international travel facilities tax of $17.70 per person for flights that begin or end in the U.S. and $8.90 per person for a flight that begins or ends in Alaska or Hawaii.  If you are shipping gifts, be sure to tack on 6.25% for a tax on transporting property by air.

Your destination airport matters. 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.

Gas taxes. You won’t escape taxes by driving. In 2015 motor gasoline taxes have averaged 48.9 cents per gallon, including a federal tax of 18.4 cents per gallon.  A few states and municipalities even charge sales tax on top of the excise taxes.

You’ll pay the most taxes if you fill up in Pennsylvania (70 cents) and the least in Alaska (30.7 cents), though that’s quite a distance to travel for a tank of gas for most Americans. Other low tax states include New Jersey and Missouri at 35 cents or less.  Fill up in New York or Hawaii and expect to pay 65 to 69 cents a gallon in taxes.

Excise taxes. Remember the luxury tax card in Monopoly? That’s another name for excise taxes, which are paid on specific types of goods and usually included in the price of the product. If you buy some “holiday cheer” for your guests to drink, you’ll pay excise tax on your alcohol purchases. Tobacco carries an excise tax as well, as do wagering activities at casinos and race tracks.

 

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