Utahns pay some of the highest cell phone taxes in the U.S.
(The Center Square) – Utahns pay some of the highest wireless cell phone taxes in the country, according to a new report released this week.
Utah’s state-local rate of just over 16% paired with the Federal Universal Service Fund (USF) rate of 12.24% means Utahns pay 28.39% in taxes, fees and government charges on wireless service, the report said.
The data was compiled by the Tax Foundation, an independent tax policy nonprofit.
Utah ranked 8th among the states with the heftiest wireless taxes. The highest state was Illinois at 34.89%, and the lowest was Idaho at 15.04%, levying just a 2.8% state-local tax rate.
Wireless taxes have risen nationally for five straight years, reaching an average of 25.39% in 2022, according to the report. That’s up modestly from 24.96% in 2021 but a steep increase overall since 2003, when the average was 15.27%, the report found.
Utah’s wireless tax represents the highest among all its neighboring states. It also reveals a disparity compared to the state’s general sales tax rate of 7.5%, much lower than Utah’s state-local wireless tax of 16.15%.
For a family living in Salt Lake City paying for a 4-line voice plan costing $100 a month, they will pay $18.53 a month in wireless taxes and fees, or a little over $222 a year, the report said.
“Excessive taxes and fees increase the cost of wireless service at a time when citizens are relying on wireless service more than ever for access to government services (including education), health care, remote work, and commerce. In fact, wireless service is becoming the sole means of communication and connectivity for many Americans, especially those struggling with poverty. More than 76 percent of all low-income adults and 68 percent of all adults have wireless-only service,” the authors of the report wrote.
Wireless users will pay an estimated $11.2 billion in taxes, fees and government charges in 2022, according to the tax rates calculated in the report.
That would be even higher if internet access was taxable too. However, H.R. 3086, known as the Permanent Internet Tax Freedom Act, amends the Internet Tax Freedom Act to permanently prevent states and local governments from also taxing internet access.
“To alleviate the regressive impact on wireless consumers, states should consider policies that transition their tax systems away from narrowly-based wireless taxes and toward broad-based tax sources that do not distort the economy and do not slow investment in critical infrastructure like wireless broadband,” the report concluded.
