4 Of this, the state allocated $2.1 million in state funds to tobacco prevention in fiscal year 2019, just 3.7% of the Centers for Disease Control and Prevention’s annual spending target. Each state’s tax code is a multifaceted system with many moving parts, and Alabama is no exception. You can add the federal tax rate of 6.64% to the tax rate of your state to find out what percentage you are paying in 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. Reform of communications taxes in states with excessive tax rates would position those states to attract additional wireless infrastructure investments that generate economic growth through the new jobs and revenue growth they produce while helping provide relief to low-income wireless users. Washington, DC (District of Columbia) has a cell phone tax rate of 11.7% and would rank #19 if ranked. State USF surcharges are imposed on intrastate revenues, while the FUSF surcharge is imposed on interstate revenues. As of this writing, no local jurisdictions had imposed a wireless 911 fee. Illinois has the highest wireless taxes in the country at 31.2 percent, followed by Washington at 28.8 percent, Nebraska at 28.1 percent, New York at 27.7 percent, and Utah at 25.6 percent. Utah moved into the top five, as the state increased its 911 fee, state and local sales taxes, and state USF charge. All persons or businesses that sell tangible personal property at retail must collect tax and make payments to the City. Alaska dropped out of the “top five” due to a significant reduction in the Alaska state universal services fund (USF) surcharge. The current total local sales tax rate in Montgomery, AL is 10.000%. South Dakota v. Wayfair, Inc. Our work depends on support from members of the public like you. Other than the cluster of low-tax states in western United States, there does not appear to be any strong regional patterns to the distribution of high-tax and low-tax states. These tools in turn make businesses more productive and profitable so that they can create new jobs that generate economic activity and tax revenues for governments. Wirefly helps you save on Internet service by offering innovative comparison tools to compare Internet providers in your area. For sales made or delivered outside the corporate limits of the city but within the police jurisdiction, the rate of tax … Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and global levels. However, there are two compelling reasons why policymakers should be cautious about expanding wireless taxes, fees, and surcharges. For flat rate per line impositions, the per line rate is multiplied by the estimated number of postpaid wireless lines. For example, if you need 2 lines with 1 GB of data each, you would select 2 GB of data with the data slider below. This occurred even though wireless providers typically did not use the public right-of-way to place equipment or, when they did use public property like buildings, the usage was de minimis and paid for through negotiated rental agreements. Sales tax is a tax paid to a governing body (state or local) for the sale of certain goods and services. During that same period, wireless taxes increased by 2.45 percentage points–from 10.20 percent to 12.65 percent. Two trends in the industry are significantly impacting the amount of taxes that wireless consumers pay on their monthly bills. Alabama first adopted a general state sales tax in 1936, and since that time, the rate has risen to 4 … In this report, the inverse of the FUSF safe harbor is used to calculate the rates of the state USF in all states except Vermont, which imposes its state USF on both interstate and intrastate charges. Wireless carriers generally sell plans that include either unlimited voice minutes or a fixed number of voice minutes for a set amount. States also have the authority to supplement the programs funded through the FUSF with their own programs funded through state universal services funds. The sales tax jurisdiction name is Semmes Pj Un, which may refer to a local government division. Sources: Methodology: Committee on State Taxation, 50-State Study and Report on Telecommunications Taxation, May 2005. Income and Salaries for Mobile - The average income of a Mobile resident is $23,509 a year. 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. 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. Check out our new state tax map to see how high 2019 sales tax rates are in your state! However, the FUSF portion of the typical consumer bill increased from 6.6 percent to 9.1 percent in the last year. The disparity between taxes on wireless voice services and general sales and use taxes grew between 2018 and 2019 as the increase in taxes on wireless voice services outpace the increase in general sales and use taxes, which only increased 1.2 percent. Alabama Legislative Act #2010-268 now mandates that customers using a Visa or Mastercard will be charged a 2.3% fee ($1.50 minimum) for each registration year renewed, as well as $1.00 mail fee for decals.A mail fee of $2.50 will apply for customers receiving new metal plates. of OK City (4.125%) & Tulsa (4.017%), Avg. An excise tax is a tax imposed on a specific good or activity. Prepaid Sales Tax; Property Tax (The Property Tax Rate Tables are now available in the Property Tax Statistics area by tax year in tables 27 and 28) Sales Tax; MyTax Illinois Tax Rate Finder; Locally Imposed Sales Tax Rates (ST-62 R-05/20) - For January 1, 2021 (and after) rates, use the Tax Rate … State USF charges are key factors in the high wireless tax burden in states like Alaska, Arkansas, California, Kansas, and Nebraska. Alabama has 765 cities, counties, and special districts that collect a local sales tax in addition to the Alabama state sales tax.Click any locality for a full breakdown of local property taxes, or visit our Alabama sales tax calculator to lookup local rates by zip code. In states like Alaska, Arkansas, California, Oklahoma, Kansas, and Nebraska, high-state USF surcharge rates add significantly to the overall burden on wireless consumers. If you need access to a database of all Alabama local sales tax rates, visit the sales tax data page. In other states, localities have the authority to impose franchise fees on telephone companies in exchange for an exclusive franchise agreement to provide service within the municipality. Ulrik is Senior Policy Analyst with the Center for State Tax Policy at the Tax Foundation. Average Monthly Revenue Per Unit (ARPU): $37.85 per Cellular Telephone and Internet Association, July 2019. Table 2 shows wireless tax, fee, and government surcharge rates as of July 2019. Finally, Florida and Illinois have special state communications taxes with a local add-on that result in rates typically two times higher than the general sales tax rates. No states increased or decreased these discriminatory state wireless taxes in 2019. No states reduced 911 fees. Updated July 2018 using state statutes, FCC data, and local ordinances.  The FCC report identified other states that routinely divert 911 fees paid by wireless consumers to other purposes: Montana, New Jersey, New York, Rhode Island, and West Virginia. Thus, the FUSF rate applied on assessable wireless revenues using the FCC safe harbor amount is 9.05 percent (24.4 percent times 62.9 percent). Learn more! of Cedar Rapids (1%) & Des Moines (1%). Wireless 911 fees vary greatly by state, from a low of zero in Missouri to a high of $3.86 per line in West Virginia. 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. 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. [email protected] . $5.9 billion in federal Universal Service Fund surcharges. 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. How does Alabama rank? The federal tax rate on wireless service (called the USF, or Universal Service Fund) is 6.64%. Wireless service is increasingly the sole means of communications and connectivity for many Americans, particularly young people and those with lower incomes. Would you consider contributing to our work? Including city and county vehicle sales taxes, the total sales tax due will be between 3.375% and 4% of the vehicle's purchase price. Other states where 911 fees increased in 2019 are Alabama, Colorado, Kansas, Maryland, Massachusetts, Michigan, North Dakota, and Utah. PDF Version; 10/2019 - 12/2019 - PDF: Statewide sales/use tax rates for the period beginning October, 2019: 08/2019 - 09/2019 - PDF: Statewide sales/use tax rates for the period beginning August, 2019 For vehicles that are being rented or leased, see see taxation of leases and rentals. 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. Table 3 also shows that three states–Louisiana, Idaho, and Nevada–impose lower taxes on wireless service than on other goods and services subject to the sales tax. Wireless and other telecommunications services are one of the few services that are consistently subject to sales and use taxes by states with both narrow and broad sales tax bases. Local sales taxes are collected in 38 states. - Tax Rates can have a big impact when Comparing Cost of Living.  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. The methodology for the report, which was originally developed by the Committee on State Taxation in a 1999 report, is detailed in Appendix A. In some cases, they can rival or even exceed state rates. Below is a listing by county of tax delinquent properties currently in State inventory. Florida took a step in the right direction by reducing its communications services tax in 2015, but wireless tax rates there are still well above the sales tax. The remaining $5.1 billion in taxes on wireless service are non-discriminatory sales and use taxes that are imposed on other taxable goods and services.. Average wireless tax rates increased nearly three times faster than average sales tax rates. Montgomery, Alabama 36130-3525 (334) 261-0600 . 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. Fortunately for wireless consumers, price competition continues to push down the average monthly per-line cost of wireless service. Act 98-192, known as the Local Tax Simplification Act of 1998, required each county and … Alabama has 765 cities, counties, and special districts that collect a local sales tax in addition to the Alabama state sales tax.Click any locality for a full breakdown of local property taxes, or visit our Alabama sales tax calculator to lookup local rates by zip code. Updated July 2019 from state statutes, FCC data, and local ordinances by Scott Mackey, Leonine Public Affairs LLP, Montpelier, VT. Table 1 also separates the impact of federal taxes and surcharges from state and local government taxes, fees, and surcharges. Other states with large disparities include Nebraska, Alaska, New York, Washington, and Pennsylvania. http://www.usac.org/cont/tools/contribution-factors.aspx. Use our tool to compare Internet providers, TV providers, and bundled services. Some states have their own USF that provide subsidies for many of the same purposes as the FUSF. Including city and county vehicle sales taxes, the total sales tax due will be between 3.375% and 4% of the vehicle's purchase price. Excessive local taxes and fees, especially the very high per line charges like those imposed in Chicago and Baltimore, impose a disproportionate burden on low-income consumers. State Sales & Use Tax Rates – Alabama Department of Revenue  Missouri enacted HB1456 in 2018 that authorizes certain cities and counties to impose wireless 911 fees on or after January 1, 2019 if approved by voters. Since these plans include both interstate calls (subject to the FUSF) and intrastate calls (not subject to FUSF), the FCC allows providers to allocate the fixed monthly plans to interstate and intrastate calls by one of two methods. Average Sales Tax (With Local): 7.977% Alabama has state sales tax of 4%, and allows local governments to collect a local option sales tax of up to 7%. This total includes approximately $5.9 billion in FUSF charges, $3.2 billion in 911 fees, and another $2.9 billion in other discriminatory state and local taxes, fees, and government surcharges. New Orleans $1.25/mo. For a detailed description of the methodology in this report, please see Appendix A. of Denver (5.41%) & Colorado Springs (2.23%), Denver ($1.20) / Colorado Springs ($1.35), Avg. 1325 G St NW Would you consider telling us more about how we can do better? Excessive taxes on wireless consumers disproportionately impacts poorer families and may have ramifications for long-term state economic development and growth. The County sales tax rate is %. 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. To facilitate interstate comparisons, local rates imposed in the most populated city and the capital city in each state are averaged into a single rate. 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. 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. The US average is 4.6%. Paying too much for Internet or TV service?  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. 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. For the period beginning July 1, 2019, the rate is 24.4 percent. Below is a list of state & local taxes and fees on monthly cell phone service. 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 of these are legacy taxes and fees that were established during the regulated telephone monopoly era that existed prior to the late 1980s. These infrastructure investments also benefit the government and nonprofit sectors in ways that do not necessarily show up directly in economic statistics but nonetheless make these sectors more efficient and enable them to lower the cost of providing government services. The New England states tend to have lower wireless tax rates, while the high-tax states are scattered throughout the country. The tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. Like the FUSF, state universal service fund charges do not apply to internet access. The 10% sales tax rate in Mobile consists of 4% Alabama state sales tax, 1% Mobile County sales tax and 5% Mobile tax. While most infrastructure investments create these types of multiplier effects, the multiplier effects for telecommunications infrastructure are higher than other industries because communications and information technology are so deeply embedded in business processes.  Figure B1 below highlights the significant growth in the FCC contribution rate since 2003. The December 2020 total local sales tax rate was also 10.000%. Updated July 2019 by Scott Mackey, Leonine Public Affairs LLP, using state statutes and regulations. Appendix B lists the rates in all 20 states with USF charges. 4 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. Updated July 2019 using state statutes, FCC data, and local ordinances. In this same example, if the $1.00 per month were divided by the taxable portion of the bill ($20.06), the tax rate would be 4.99 percent. Figure 2 shows the states by average state-local rates, without including the FUSF imposition. Below is a list of state & local taxes and fees on monthly cell phone service. Average wireless tax rates increased nearly three times faster than average sales tax rates. Since then, however, wireless tax rates have climbed steadily to their current rate of 21.7 percent. Between 2005 and 2006, wireless taxes dropped after the federal courts forced the IRS to end the imposition of the 3 percent federal excise tax on wireless service. The US average is $28,555 a year. The Department is required by law to distribute the localities’ portion of the taxes on a quarterly basis to all municipalities and counties based on population. - Tax Rates can have a big impact when Comparing Cost of Living. 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 Alabama (AL) state sales tax rate is currently 4%. Shop with confidence knowing that Wirefly wants to help you find the best prices on cell phones, cell phone plans, TV, and Internet service. 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. A narrow tax base is non-neutral and inefficient. In most of these states, the local wireless tax is in addition to state taxes. Network investment is important not only to consumers and businesses that use these networks but also to the entire American economy. Table 1 shows national trends in tax rates imposed by all levels of government on taxable wireless service between 2003 and 2019.  Bill Ruthhart and Hal Dardick, “Emanuel’s Latest Possible Tax Hike: 911 Phone Fees,” Chicago Tribune, June 1, 2017. This Closure Is Due To Utility Work For The Broad Street Project. First, as discussed above, wireless taxes and fees are regressive and have a disproportionate impact on poorer citizens. Second, discriminatory taxes may slow investment in wireless infrastructure. 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. Search Tax Delinquent Properties . A sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions.  Federal Communications Commission, “Tenth Annual Report to Congress on State Collection and Distribution of 911 Fees and Charges for the Period January 1, 2017 to December 31, 2017,” https://www.fcc.gov/files/10thannual911feereporttocongresspdf. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates. In the last year, the only change in local telecommunications tax tracked in this report was an increase in the local telecommunications excise tax in Springfield, Illinois from 4 percent to 6 percent. Unfortunately, consumers have not enjoyed the full benefits of wireless price competition because taxes, fees, and government surcharges continue to increase. 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. Each state’s tax code is a multifaceted system with many moving parts, and Alabama is no exception. The December 2019 total local sales tax rate was also 10.000%. Available at: http://www.chicagotribune.com/news/local/politics/ct-rahm-emanuel-phone-fee-increase-met-0602-20170601-story.html. Tax on a Single Line Voice Plan Costing $37.85 per month. Note: Excludes local general sales taxes. We work hard to make our analysis as useful as possible. $2.9 billion in other industry-specific state and local taxes and fees. In 2019, Illinois retained its ranking as the state with the highest wireless tax burden, followed by Washington, Nebraska, and New York. Appendix C provides a detailed breakdown of the specific taxes, fees, and government surcharges imposed in each state, including the respective rates of each. 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 sales tax discount consists of 5% on the first $100 of tax due, and 2% of all tax over $100 not to exceed $400.00. District Rate; Alabama State: 4.000%: Montgomery County: 2.500%: Montgomery: 3.500%: Total: 10.000%: Montgomery Details They currently do not apply to internet access service, information services, and intrastate telecommunications services. 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. Cities and/or municipalities of Alabama are allowed to collect their own rate that can get up to 5% in city sales tax. The state programs are funded by surcharges applied to the intrastate portion of telephone charges. A gross receipts tax is applied to a company’s gross sales, without deductions for a firm’s business expenses, like costs of goods sold and compensation. 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. 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%. Media reports suggested that the 911 fee increase was intended to cover a shortfall in city pension obligations. Sales Tax is imposed on the retail sale of tangible personal property in Huntsville. 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. Ample evidence exists that investments in wireless networks provide economic benefits to the broader economy because so many sectors–transportation, health care, energy, education, even government–use wireless networks to boost productivity and efficiency. 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. For tax rates in other cities, see Alabama sales taxes by city and county. States should study their existing communications tax structure and consider policies that transition their tax systems away from narrowly-based wireless taxes and toward broad-based tax sources that do not distort consumer purchasing decisions and do not slow investment in critical infrastructure like wireless broadband. The Alabama sales tax rate is currently %. 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. If you need access to a database of all Alabama local sales tax rates, visit the sales tax data page. As a 501(c)(3) nonprofit, we depend on the generosity of individuals like you. 2. $3.2 billion in 911 fees, a category that includes hundreds of millions of dollars that are not actually used for 911 purposes in some states. - The Income Tax Rate for Mobile is 5.0%. 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. Nationally, these impositions make up about 21.7 percent of the average customer’s bill–the highest rate ever. 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