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November 13, 2017

Pa. pays more in cell phone taxes than most other states, report says

A new report from the Tax Foundation shows that Pennsylvanian's are charged more taxes for their cell phones than almost all other U.S. states.

Ranking fifth-highest for state and local cell phone taxes, Pennsylvania saw a wireless state-local tax rate of 15.98 in 2017, federal rate of 6.34 percent, for a combined total rate of 22.32 percent. The only states charged more are Washington, Nebraska, New York, and Illinois.

In a typical American household with four wireless phones, that can reportedly amount to around $221 annually in taxes and fees.

New Jersey and Delaware, however, appear less burdened by cell phone taxes than Pennsylvania. New Jersey ranked No. 34, with a 9.04 percent tax rate for state-local wireless, and Delaware was yielded one of the lowest rates in the nation, falling at No. 48 with a 6.45 percent wireless state-local rate.

The Tax Foundation also points out that Pennsylvania is one of the several states that imposes a much larger tax on wireless services than the sales tax charged for other products. The disparity of wireless taxes is about 2.5 times more than that of other goods.

One of the authors of the report, Scott Mackey, said many consumers don’t realize the high rate of wireless taxes because those charges are often masked in the fine print that nobody reads.

“Local government, state government, and the federal government all get a piece of the cell phone user’s bill,” Mackey told WHYY.

“So, in the case of Pennsylvania, you have both the state sales tax and the gross receipts tax. You’ve got local taxes in Philadelphia, and you’ve got 911 fees – $1.65 per line – and federal tax that goes to pay for multiple programs above that.”

Pennsylvania and its adjacent states were not among those to increase 911 fees so far in 2017, but many states are under pressure to fund 911 program upgrades, the Tax Foundation report found. Connecticut, Louisiana, Oklahoma, Utah, and West Virginia each increased its 911 fees this year.

View the full report here.