Kitchen Table Economics

Summer Travel Brings Hidden Taxes

It’s summer and Americans have vacation on their minds. But travelling isn’t cheap, especially when you factor in the hidden taxes we pay to Uncle Sam. Here are just a few:

  1. Gas taxes. What you pay at the pump isn’t just gasoline for your car. For every $40 you spend filling up your tank, almost eight dollars goes to the government in taxes. The federal gas tax is 18.4 cents per gallon, but that doesn’t even count state gas taxes, which average another 27 cents per gallon. In states like New York, the gas tax can surpass 50 cents per gallon. Pennsylvania’s gas tax, for example, hovers around 70 cents per gallon! That’s a lot of pain at the pump.
  2. Airline taxes. When you buy a plane ticket from Boston to Los Angeles, for instance, you’re forced to pay a 7.5 percent tax to travel. The Domestic Flight Segment Tax charges you $4 for every segment of your flight. (A segment is defined as “a flight leg consisting of one takeoff and one landing by a flight.” A layover comes out to two segments, and so forth.) If you’re travelling internationally, then be prepared for the International Arrival and Departure Taxes, each totaling $17.70 per flight. The September 11th Security Fee adds as much as $11.20 round-trip to your bill. We now pay nearly 25 percent of our airfare to the U.S. government in taxes.
  3. Hotel and rental car taxes. What happens when you reach your destination? You pay even more. In the United States, travelers can dole out as much as $33 in taxes for a $200 hotel room. Car rentals are an even greater burden: When you factor in insurance, mandatory theft protection, a sales tax, and other surcharges, your final bill can come out to hundreds—even thousands—of dollars. Research shows that hotel occupancy and rental car fees take up 30 percent of a travel budget in cities like Boston, Massachusetts and Portland, Oregon.

For more information about hidden taxes, watch our short explainer video here: