Cell Phone Tax Rates by State, 2025

Key Findings

A typical American family with 4 telephones on a “household share” plan, paying $100 per 30 days for taxable wi-fi companies, would pay over $330 per yr in taxes, charges, and authorities surcharges.
Taxes, charges, and authorities surcharges make up a record-high 27.60 p.c of the common wi-fi companies invoice. Illinois residents proceed to have the best wi-fi taxes within the nation at 38.32 p.c, adopted by Washington at 34.98 p.c and Arkansas at 34.00 p.c. Idaho residents pay the bottom wi-fi taxes at 16.82 p.c.
Louisiana had the most important enhance of any state in 2025—from 24.70 p.c to 31.90 p.c—as a result of passage of a taxA tax is a compulsory cost or cost collected by native, state, and nationwide governments from people or companies to cowl the prices of basic authorities companies, items, and actions. reform package deal that elevated the gross sales taxA gross sales tax is levied on retail gross sales of products and companies and, ideally, ought to apply to all closing consumption with few exemptions. Many governments exempt items like groceries; base broadening, corresponding to together with groceries, may hold charges decrease. A gross sales tax ought to exempt business-to-business transactions which, when taxed, trigger tax pyramiding. fee on wi-fi companies from 3.45 p.c to 10 p.c.
The Federal Common Service Fund (FUSF) cost elevated once more, from 12.76 p.c to 13.36 p.c. Common state and native taxes additionally elevated, from 14.01 p.c to 14.25 p.c.
The federal Everlasting Web Tax Freedom Act prevents state and native governments from imposing taxes and costs on wi-fi web entry. With out this federal prohibition, taxes and costs that apply to wi-fi voice companies could possibly be utilized to web entry and considerably enhance the tax burden on shoppers who entry the web utilizing wi-fi gadgets.
Since 2012, the common cost from wi-fi suppliers decreased by 29 p.c, from $47.00 per line per 30 days to $33.36 per line. Nevertheless, throughout this identical time, wi-fi taxes, charges, and authorities surcharges elevated from 17.18 p.c to 27.60 p.c of the common invoice, leading to client advantages from decrease wi-fi costs being offset by greater taxes and costs.
Roughly 83 p.c of low-income adults and 78 p.c of all adults stay in wireless-only households. Wi-fi taxes are regressive and create important burdens on low-income households.

Introduction

Taxes, charges, and authorities surcharges on the standard American wi-fi client elevated once more, from 26.77 p.c of a typical month-to-month invoice in 2024 to 27.60 p.c in 2025. This whole contains state and native taxes averaging 14.25 p.c and the Federal Common Service Fund (FUSF) fee of 13.36 p.c.[1]

That is the 16^th version of our report monitoring the taxes, charges, and authorities surcharges imposed on wi-fi voice companies by federal, state, and native governments. Our methodology stays constant. We examine the share charges of the taxes, charges, and authorities surcharges imposed on taxable wi-fi companies, referred to hereafter as “taxes.” Flat fee impositions, corresponding to a $1.00 per 30 days per-line 911 payment, are transformed to a proportion utilizing the common month-to-month trade income per line as tracked by the Mobile Telecommunications and Web Affiliation (CTIA).

The wi-fi market has turn into more and more aggressive. The outcome has been regular declines within the common value for wi-fi companies. Over the past decade or so, the common month-to-month income per wi-fi line has fallen from $47.00 per 30 days to $33.36 per 30 days. Sadly, this value discount for shoppers has been partially offset by greater taxes.

There have been about 579 million wi-fi subscriber connections on the finish of 2024.^[2] Wi-fi subscribers pays roughly $12.5 billion in taxes to state and native governments in 2025 based mostly on the tax charges calculated on this report, together with:

$5.4 billion in gross sales taxes and different non-discriminatory consumption taxes that additionally apply to different taxable items and companies,
$4.3 billion in state and native 911 and 988 charges, which incorporates a whole lot of hundreds of thousands of {dollars} that aren’t really used for 911 functions in some states, and
$2.8 billion in extra telecommunications-specific taxes.

Wi-fi companies are sometimes the only technique of communication and connectivity for People, particularly youthful folks and low-income households. Based on the Facilities for Illness Management and Prevention (CDC), in 2024, 78 p.c of all adults and 83 p.c of low-income adults lived in wireless-only households.[3] The $7.1 billion in state and native taxes and costs which might be levied along with gross sales taxes disproportionately influence People least capable of afford them.

Wi-fi Taxes and Charges Set a New Report Excessive in 2025

Taxes on wi-fi companies elevated to their highest degree ever, pushed by one other FUSF surcharge fee enhance and a small enhance in state and native taxes. The state and native tax burden elevated from 14.01 p.c to 14.25 p.c, whereas the FUSF surcharge fee elevated from 12.76 p.c to 13.26 p.c.

Desk 1. US Common Wi-fi and Common Gross sales & Use Tax Charges

Notes: Methodology derived from Committee on State Taxation, “50-State Research and Report on Telecommunications Taxation,” Might 2005. Up to date July 2025 from; Federal contains 3% federal excise taxAn excise tax is a tax imposed on a selected good or exercise. Excise taxes are generally levied on cigarettes, alcoholic drinks, soda, gasoline, insurance coverage premiums, amusement actions, and betting, and sometimes make up a comparatively small and risky portion of state and native and, to a lesser extent, federal tax collections. (till 5/2006) and federal common service fund cost, which is about by the FCC and varies quarterly:

Federal USF 7/1/2025 — 37.1% Interstate protected harbor x 36.0% contribution issue = 13.36% efficient tax fee

Supply: State statutes; FCC information; native ordinances; creator calculations.

The speed of the FUSF surcharge has been growing steadily since 2017. These FUSF fee will increase have been pushed by the decline within the value of telecommunications companies, mixed with the shift in client purchases from telecommunications companies to web entry. This has compelled the FCC to extend charges simply to maintain revenues fixed. The US Supreme Court docket not too long ago heard a case difficult the constitutionality of the FUSF.^[4] Whereas the Court docket upheld the legality of the FUSF, the case has prompted new curiosity in reforming how the surcharge is collected and administered.

The mixed state and native tax burdens in every state are ranked from highest to lowest in Desk 2. Illinois has the best wi-fi taxes within the nation with state and native charges of practically 25 p.c.

Desk 2. Taxes, Charges, and Authorities Fees on Wi-fi Providers, July 2025

Word: The native tax fee is calculated as the common of the tax charges in probably the most populated metropolis and the capital metropolis.

Supply: State statutes; FCC information; native ordinances; creator calculations.

Determine 1 exhibits that Washington, Arkansas, New York, and Kansas spherical out the highest 5 costliest states for wi-fi taxes. Idaho, Nevada, and Montana have the bottom wi-fi taxes within the nation.

States have debated whether or not to increase the gross sales tax baseThe tax base is the full quantity of earnings, property, property, consumption, transactions, or different financial exercise topic to taxation by a tax authority. A slim tax base is non-neutral and inefficient. A broad tax base reduces tax administration prices and permits extra income to be raised at decrease charges. from tangible items to companies for many years, with proponents of increasing the gross sales tax base to companies arguing that the disparity in taxation between taxable tangible items and exempt companies doesn’t make sense. On the subject of wi-fi companies, nevertheless, the precise reverse is true. Wi-fi companies are topic to state and native taxes 1.8 occasions greater than the gross sales taxes imposed on items, with the common state and native wi-fi tax fee of 14.25 p.c and the common mixed gross sales tax fee of seven.87 p.c. In 17 states, wi-fi taxes are greater than twice as excessive as gross sales taxes. Three states which have chosen to not impose a gross sales tax—Delaware, Montana, and New Hampshire—have particular taxes on wi-fi and different telecommunications companies.

Whole Taxes Paid

Wi-fi shoppers pays about $12.5 billion in taxes, charges, and authorities surcharges to state and native governments in 2025 based mostly on the tax charges calculated on this report. Lower than half of this quantity—$5.4 billion—represents state and native gross sales and use taxes. These taxes are broadly utilized to taxable items and a few companies and don’t apply solely to wi-fi companies. The remaining $7.1 billion is taxes that solely goal wi-fi and different telecommunications companies. For a extra detailed dialogue of the methodology on this report, please see earlier years’ reviews.

The Everlasting Web Tax Freedom Act prevents state and native governments from imposing taxes on web entry companies, together with wi-fi web entry. With out the safety of this federal regulation, the excessive excise tax charges utilized to taxable wi-fi companies could possibly be utilized to web entry, and client tax burdens can be considerably greater.

Desk 3. Disparity Between Wi-fi Tax & Payment Price and Common Gross sales Tax Price, July 2025

Supply: State statutes, FCC information, native ordinances, creator calculations.

State Tendencies in Wi-fi Taxes

911 and 988 Charges

Most states impose a flat, per-line tax on telecommunications prospects to fund capital and working bills for state and native emergency 911 programs. These charges fluctuate considerably amongst states, from $0 in most counties in Missouri to a excessive of $5.00 per line per 30 days in Chicago.[5] In 2025, California, Colorado, Mississippi, New Hampshire, New Mexico, South Carolina, Utah, and West Virginia elevated 911 taxes. The most important will increase had been in Mississippi (from $1.05 per line per 30 days to $2.05 per line per 30 days) and New Mexico (from $0.51 per line per 30 days to $1.00 per line per 30 days). West Virginia, which already had the best statewide wi-fi 911 tax at $3.64 per line per 30 days, elevated it additional to $4.01 per line per 30 days.

In 2021, a brand new tax started showing on buyer payments. The FCC mandated {that a} new three-digit quantity, 988, be designated nationally to contact suicide prevention hotlines that shall be operated by the states. A regulation handed by Congress approved states to impose 988 taxes to pay for among the creation and operation of 988 disaster hotline facilities. In 2021, Virginia was the primary state to impose a brand new 988 tax at $0.12 per line per 30 days. Since then, 10 extra states have enacted 988 taxes on wi-fi shoppers. Illinois, Maryland, and Minnesota carried out new 988 taxes in 2025, whereas Colorado lowered its 988 tax from $0.14 per line per 30 days to $0.07 per line per 30 days.

State Common Service Funds

Twenty-one states and Puerto Rico impose their very own “common service fund” (USF) cost on wi-fi companies that present subsidies for lots of the identical functions because the FUSF. Below federal regulation, the federal authorities imposes the cost as a proportion of interstate revenues, and states might impose a cost as a proportion of intrastate revenues. Not too long ago, nevertheless, some states have shifted from a percentage-based cost to a per-line USF imposition, which has resulted in a big portion of the state USF burden being borne by multi-line wi-fi plans.

The best per-line cost is in Nebraska at $1.75 per line per 30 days. A household with a share plan with 4 traces pays $7.50 per 30 days ($90 per yr) even when they’ve the lowest-price wi-fi plan. Different per-line state USF impositions are in Utah, New Mexico, Maine, Kentucky, and Maryland. On a optimistic be aware, California and Oklahoma lowered their per-line USF prices in 2025.

The remaining states proceed to impose their USF prices on a proportion foundation. Texas made headlines in 2022 when the Public Utility Fee authorised a seven-fold enhance within the state USF fee, from 3.3 p.c to 24 p.c of intrastate prices. A subsequent order lowered the speed to 12 p.c of intrastate prices, which nonetheless resulted in a 350 p.c enhance in USF prices on wi-fi buyer payments. Along with Texas, different states with excessive USF charges embrace Kansas at 7.6 p.c, adopted by Arkansas (7.5 p.c), Alaska (6.3 p.c), and Oregon (3.8 p.c). In 2025, Arkansas, Indiana, and Wyoming lowered their USF proportion prices whereas Kansas and Nevada elevated them.

State Wi-fi Taxes

Along with 911 charges, 988 charges, and USF prices, 13 states impose wi-fi taxes which might be both along with gross sales taxes or in lieu of gross sales taxes however at a better fee. In 2025, the Maine legislature voted to repeal the “Service Supplier Tax” that imposed a better state tax fee on wi-fi companies. That repeal will take impact on January 1, 2026.

Desk 4. State Wi-fi Taxes by State

Supply: State statutes.

Native Wi-fi Taxes

Native governments all through the nation additionally impose taxes on wi-fi companies that aren’t imposed on different items and companies. Many of those taxes are imposed due to legacy taxes that had been established throughout the regulated phone monopoly period that existed previous to the Eighties breakup of AT&T. Native governments in some states have longstanding authority to impose right-of-way (ROW) charges on phone firms for putting poles, wires, and tools on native property. In different states, localities impose franchise or license taxes on phone firms in trade for the privilege of doing enterprise in a metropolis.

Within the late Nineties and early 2000s, when wi-fi companies started to compete with wireline companies, localities turned involved about shedding revenues from native taxes on wireline phone firms and sought to increase these taxes to wi-fi companies. This occurred in some states regardless that wi-fi suppliers sometimes didn’t use the general public right-of-way to position tools or, after they did use public property like on high of buildings, the utilization was de minimis and paid for by way of negotiated rental agreements. This response to altering client conduct may also be noticed in native taxation of streaming companies and cable firms, the place localities are preventing to retain income by taxing streaming companies as in the event that they had been utilizing ROW like cable firms.[6]

Native governments in 14 states presently impose some kind of tax on wi-fi companies along with native choice gross sales taxes. In most of these states, the taxes are additive and solely additional enhance the tax burden on wi-fi companies. California and Illinois are the exceptions; in these states, wi-fi companies are topic to taxes in lieu of the gross sales tax however normally the wi-fi tax is greater than the gross sales tax. Desk 5 offers a breakdown of the varieties of native wi-fi taxes that apply. Native taxes have a big influence on the general tax burden on wi-fi companies in a number of of the states with the best wi-fi taxes, together with Illinois, Washington, Nebraska, New York, Utah, and Maryland.

Desk 5. Native Wi-fi Taxes by Sort

Word: Excludes native basic gross sales taxes.
Supply: Native ordinances.

California has the best native taxes, with charges as much as 11 p.c. Washington follows carefully with native taxes as excessive as 9 p.c, adopted by Illinois (as much as 7 p.c) and Florida (as much as 7 p.c). Along with these percentage-based taxes, Illinois permits native per-line taxes of $5.00 per line per 30 days in Chicago, and Maryland permits Baltimore to cost $4.00 per line per 30 days. Nebraska wi-fi shoppers obtained some aid from excessive native taxes this yr, because the governor signed laws in 2024 to decrease the cap on native wi-fi taxes from 6.25 p.c to 4 p.c.

Native governments apply a variety of wi-fi taxes. In Chicago, a household of 4 paying $100 per 30 days for taxable wi-fi companies would pay practically $36 per 30 days (over $430 per yr) in state and native taxes on wi-fi companies. That very same household in Baltimore would pay over $350 in state and native wi-fi taxes yearly.

Desk 6. State and Native Wi-fi Taxes and Charges on Single-Line and Multi-Line Plans in Chosen Cities, July 2025

Supply: Native ordinances.

The Regressive Influence of Wi-fi Taxes

Economists use the time period “regressive” to explain tax programs that impose greater tax burdens on low-income taxpayers than on high-income taxpayers, as measured as a proportion of earnings. As a result of low-income households pay a better proportion of their budgets on wi-fi companies than do high-income households, additionally they pay a better proportion of their budgets on wi-fi taxes. Due to this fact, wi-fi taxes are regressive.

The development of accelerating per-line impositions—for 911 and 988 taxes, state USF prices, and even basic wi-fi taxes—makes wi-fi taxes much more regressive. Many consumption taxes have regressive results, and whereas that’s not in itself an argument towards levying them, lawmakers needs to be cautious when growing regressive taxTaxes can create totally different burdens on taxpayers of various earnings ranges, measured by evaluating taxes paid as a fraction of earnings. A regressive tax is one which creates a bigger burden on lower-income taxpayers than on middle- or higher-income taxpayers. burdens, notably within the case of a focused excise tax that doesn’t meaningfully internalize any exterior harms and infrequently exceeds any quantity essential to pay for associated authorities applications.

Extreme taxes and costs enhance the price of wi-fi companies at a time when residents are counting on wi-fi companies greater than ever for entry to authorities companies (together with schooling), well being care, distant work, and commerce. The truth is, wi-fi companies have gotten the only technique of communication and connectivity for a lot of People, particularly these battling poverty. Eighty-three p.c of low-income adults had wireless-only service, and 78 p.c of all adults had been wireless-only on the finish of 2024.

The Financial Influence of Extreme Wi-fi Taxes

Policymakers needs to be cautious about increasing wi-fi taxes, charges, and authorities surcharges for 2 major causes. First, as mentioned above, wi-fi taxes are regressive and have a disproportionate influence on low-income shoppers. Extreme taxes and costs enhance the price of entry to wi-fi service for low-income shoppers at a time when many depend on wi-fi service as their solely telecommunications service.

Second, discriminatory taxes might gradual funding in wi-fi infrastructure. Ample proof exists that investments in wi-fi networks present financial advantages to the broader financial system as a result of so many sectors—transportation, well being care, vitality, schooling, and even authorities—use wi-fi networks to spice up productiveness and effectivity. These financial advantages had been particularly necessary throughout the COVID-19 pandemic as a result of wi-fi networks enabled workers to work remotely and allowed college students to proceed their research. These traits have continued post-pandemic.

Community funding is necessary not solely to shoppers and companies that use these wi-fi networks but in addition to your complete American financial system. A report by the Worldwide Chamber of Commerce (ICC) surveyed the proof from the US and Europe in addition to from the creating world. They discovered constantly that wi-fi infrastructure funding allows a complete entrepreneurial tradition to deal with creating functions and gadgets to make companies extra productive and to enhance the lives of shoppers. These instruments in flip make companies extra profitable in order that they will create new jobs that generate financial exercise and tax revenues for governments.

The ICC notes, “[r]emedying the discriminatory tax therapy of telecom items and companies might cut back tax receipts within the short-term, however the longer-term enhance in using superior functionality gadgets, service demand, and community deployment ensuing from these tax reductions is prone to counteract this lack of income over time.”^[7]Policymakers must weigh the trade-offs between the short-term income advantages of extreme wi-fi taxes and the long-term financial influence on the state from lowered infrastructure funding.

Making use of the gross sales tax, a conventional broad-based consumption taxA consumption tax is usually levied on the acquisition of products or companies and is paid immediately or not directly by the buyer within the type of retail gross sales taxes, excise taxes, tariffs, value-added taxes (VAT), or earnings taxes the place all financial savings are tax-deductible., is completely applicable, however extreme focused taxation of wi-fi companies lacks the standard justifications—a “user-pays” system or the internalization of social prices—for excise taxation, elevating client prices and undercutting funding in a significant market.

Conclusion

Wi-fi shoppers proceed to be burdened with excessive taxes, charges, and authorities surcharges in lots of states and localities all through the nation. Nicely over half of the $12.5 billion in state and native taxes imposed on wi-fi companies are discriminatory in nature, as they solely apply to telecommunications companies. These taxes disproportionately burden low-income People, and disincentivize funding in new wi-fi companies.

To alleviate the regressive influence on wi-fi shoppers, states ought to look at their current communications tax construction and think about insurance policies that transition their tax programs away from narrowly based mostly wi-fi taxes and towards broad-based tax sources that don’t distort the financial system and don’t gradual funding in important infrastructure like wi-fi broadband.

Keep knowledgeable on the tax insurance policies impacting you.

Subscribe to get insights from our trusted specialists delivered straight to your inbox.

[1] This system subsidizes telecommunications companies for colleges, libraries, hospitals, low-income folks, and rural phone firms working in high-cost areas. The calculation of the FUSF surcharge fee assumes that wi-fi suppliers use the “protected harbor” proportion.

[2] Contains watches, tablets, and different linked gadgets. Robert Roche, “CTIA’s Wi-fi Trade Indices Report, Yr Finish 2022 Outcomes,” September 2025, web page 7.

[3] Stephen J. Blumberg and Julian V. Luke, “Wi-fi Substitution: Early Launch Estimates from the Nationwide Well being Interview Survey, July-December 2024,” Nationwide Heart for Well being Statistics, June 2025, https://www.cdc.gov/nchs/information/nhis/earlyrelease/wireless202506.pdf.

^[4] Federal Communications Fee v. Shoppers’ Analysis, 606 U.S. (2025).

[5] Missouri has no state 911 payment on billed 911 service however does have a 911 payment on pay as you go wi-fi companies.

[6] Ulrik Boesen, “Chopping the Wire from Cable Has States Courting New Income Streams,” Tax Basis, Jul. 19, 2021, https://taxfoundation.org/streaming-services-tax/.

[7] Worldwide Chamber of Commerce, “ICC Dialogue Paper on the Adversarial Results 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.

Share this text

Source link