Higher Sin Taxes, Travel Taxes Across the States

As you travel around the U.S. this summer, prepare to pay more for everything from gas to bourbon. Faced with budget deficits, a sharp drop in federal funds and outdated infrastructure, states are hiking sales and excise taxes — in some cases, for the first time in years.

Motorists will be hard-hit. This year, Wyoming raised its gas tax to 24 cents from 14 cents per gallon. California’s excise tax on gas rose 3.5 cents, to 39.5 cents a gallon. Vermont raised its gas tax by nearly 6 cents, to about 32 cents per gallon.

If you enjoy a drink with dinner, sin taxes could also squeeze your budget. Last year, Washington State privatized liquor sales — a move that usually results in lower prices — but coupled it with a tax increase on distilled spirits of up to $35.22 per gallon. The tax hike, paid by commercial establishments but passed along to customers, has increased the price of drinks purchased in bars and restaurants, along with bottles bought in a store, says Scott Drenkard, an economist with the Tax Foundation.

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Smokers may want to quit. In 2012, Illinois more than doubled its excise tax on cigarettes to $1.98 per pack. That levy, combined with Chicago’s local tax, adds $4.66 to the price per pack. In New York City, state and local cigarette taxes add $5.85 to the price of a pack. “Cigarettes cost around $11 a pack in New York,” Drenkard says. “That surprises people.”

Taxes on hotels and rental cars are popular with state lawmakers because they’re typically paid by nonresidents who can’t vote against them. Virginia’s recently enacted transportation funding bill added a 3% hotel tax to existing tax rates for hotels in Northern Virginia.