Planning a Vacation? Make Sure You Account for Travel Taxes

The “Trifecta” of Travel-Based Taxes Can Increase Costs up to 30 Percent: NCPA


Source: NCPA 

Rising taxes on hotels, car rentals, and airline tickets are pricing many families out of travel and discouraging tourism, according to a new report by National Center for Policy Analysis Research Associate Jacob Kohlhepp.

“In a drive toward more revenue, officials at every level of government have raised a trifecta of travel-based taxes dramatically,” says Kohlhepp. “While travel taxes are a politically popular revenue tool, they discourage travel and tourism – particularly for low-income individuals and families.”

The tax rates on hotels, car rentals, and airline tickets vary by state. According to the report:

  • Twenty-two states charge a hotel occupancy tax, which can range from 3 to 13 percent of a night’s stay;
  • Taxes on car rentals can raise rental prices by nearly 25 percent;
  • There are seventeen different taxes and fees levied on air travel, which can increase base airfare by 30 percent.

"There is no doubt that air travel is more affordable for families than it was back in the day when were prices were set by the government," says Senior Fellow Pam Villarreal. "But other aspects of travel are prohibitive, particularly in large cities."