You’re well aware of income taxes and sales taxes. You see federal and, where applicable, state income taxes withheld from wages; you handle your income tax obligations on annual income tax returns. If you work, you pay Social Security and Medicare taxes on your earnings. If you live in a place with sales taxes, you see the state and, where applicable, local charges when you make purchases. However, there are numerous government charges—some are visible while many are invisible—that you may be paying every day. Here is a roundup of some of the other taxes you may pay and whether you can deduct them.
Federal Excise Taxes and Other Federal Fees
Excise taxes are a type of federal sales tax or fee. Prior to the 16th Amendment to the Constitution allowing the income tax, the federal government was run entirely on excise taxes. Today, they continue to be only about 3% of total federal revenue.
Gasoline tax. Years ago, the federal tax on gasoline you use for your vehicle was displayed at the pump; no more. Today, this tax is 18.4¢ per gallon. If you use 50 gallons of gas a month, you’ll pay more than $9 dollars (over $110 annually).
Airline ticket tax. Every time you fly, domestically or internationally, you pay a federal excise tax for the privilege. Currently, these taxes are:
Don’t think you can avoid the tax by taking another mode of transportation. There’s a ship passenger tax of $3 per passenger. There is also a variety of fuel-related taxes that bus lines incur and pass on to riders.
Telephone taxes and fees. If you ever look closely at your monthly phone bill, you’ll see a variety of charges, many of which you may not even be aware of. Different charges apply to landlines and cell or smartphones. Here are some of the charges:
Industry-specific excise taxes
There are a variety of excise taxes that apply to specific industries or products. These taxes are on imposed on the manufacturer or business offering the product or service, but likely they are passed on to consumers. Examples of industry-specific excise taxes include:
Deductibility: You cannot separately deduct these taxes and charges. However, if you incur any of these costs for business, they are a business deduction. For example, all of the phone-related costs are part of the bill that is deductible for business.
State and Local Taxes and Fees
Like the federal government, with the exception of Alaska, Delaware, Montana, New Hampshire, and Oregon, states and various localities also impose sales taxes. And there are numerous state and local fees and charges levied for a variety of things. Here are some examples:
Deductibility: As in the case of federal charges, you cannot separately deduct these taxes and charges. However, if you incur any of these costs for business (e.g., a lodging tax on accommodations while traveling away from home), they are a business deduction.
Homeowners’ charges and fees. If you own a home, you face a variety of taxes and fees. Some are deductible as real property taxes, while others are not.
Government taxes and charges, in addition to income taxes, Social Security and Medicare taxes, and general sales taxes, can eat up a sizable portion of your income each year. Be aware of what you pay and determine whether any charges may be deductible.
Tax credits, including the foreign tax credit, the minimum tax credit, the retirement savings contribution credit, and the residential energy credit, increased by 8.2% in 2007 to $63.8 billion. The child tax credit, dependent care credit, and education credits declined slightly.
Source: Statistics of Income Bulletin, Fall 2009View all factoids