Beware of hidden taxes this holiday season

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by Alfredo Ortiz

Thanksgiving brings good food, great company, and the busiest travel days of the year. Whether you plan to travel by car or plane for the holiday, or spend big on presents, the government has imposed excise taxes, or extra fees, that will leave you less than joyful this holiday season.

For those traveling by air, various taxes are applied to the base price of a ticket, which help maintain and operate airways and airports, strengthen national security, fund environmental protections, and more.

It’s a bit complicated, so let’s break these taxes down further.

TRAVELING BY AIR AND CAR

For domestic flights, there is a general airline tax applied to the base fare, a flight segment tax, a September 11 fee, and a passenger facility charge, all of which depend on a specific itinerary. For international flights, these fees increase and additional taxes are added on. For example, on a domestic trip base fare of $100, taxes would increase the total cost by about 35 percent.

Planning to travel over state lines by car this holiday season? If so, beware of the varying gasoline taxes in different areas. While the federal government applies an even tax rate across the country, additional taxes are often tacked on by states and cities.

For example, in California, the state tax on gas is 14 cents per gallon, the state excise tax is 47 cents per gallon, and the federal excise tax is 18 cents per gallon. In total, that’s almost a dollar more per gallon because of taxes.

HOSPITALITY TAXES

The hospitality industry is not exempt from these taxes. There is often a steep tax applied to hotel guest bills. As with the gas tax, this amount varies depending on location.

For example, the highest occupancy tax that hits hotel goers is seen in the District of Columbia, coming in at 14.95 percent. However, luckily for visitors to the Capital City, an additional sales tax does not apply. In Hawaii, it’s a different story. While the lodging tax is only 10.25 percent, an additional 4 percent sales tax is added to the bill, totaling 14.25 percent. For those thinking of jetting off to the warmth of the Aloha State for a winter vacation, be sure to factor in these additional costs.

PURCHASING CONSIDERATIONS

Keep in mind sales taxes that also differ by state as you begin to purchase gifts for your loved ones. For example, the sales tax for California is 7.25 percent. Colorado’s sales tax is the lowest at 2.9 percent. Some states don’t have any sales tax at all.

Last year, the National Retail Federation found that consumers were expecting to spend roughly $1,000 on items such as gifts and decorations. So, this tax can really add up.

All of these taxes – both hidden and known – can add a staggering amount to what appears to be a reasonable trip or gift. But knowing about them will give us one more thing to be thankful for this holiday season.

Alfredo Ortiz is the president of the Job Creators Network.

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