Tax Heavens and Hells for Travelers
Does your summer family vacation budget include a line item for taxes?
Does your summer family vacation budget include a line item for taxes? It should, because depending on your destination, taxes on hotels, rental cars and restaurant meals could add 35% to your getaway bill.
Taxes on travel and tourism have been on the rise since the 1990s and now cost travelers nearly $30 per day, on average, in the most popular destination cities, according to the Global Business Travel Association (GBTA). That means a family of four that plans to spend $1,000 for their trip could end up spending $100 or $200 more than they expected because of taxes, says Joseph Bates, the GBTA’s vice-president for research.
Here are the five cities that impose the heftiest average tax burdens on travelers and tourists, and the five that impose the least, based on data from the GBTA’s annual survey of 50 top U.S. travel destinations and Kiplinger’s State-by-State Tax Guide. With the help of TripAdvisor’s list of top U.S. destinations, we then filtered out cities that are skewed toward business travelers. In addition to taxes on hotels, rental cars and restaurant meals, we included state gas taxes and state excise taxes (also known as sin taxes) on beer, wine and liquor.
1. Highest Tax Bill -- Chicago: $41.04/day
- Hotel tax: 16%
- Rental-car tax: 24.82%
- Gas tax: $0.39 per gallon
- Tax on restaurant meals: 10.75%
- Beer: $0.23 per gallon
- Wine: $1.39 per gallon
- Liquor: $8.55 per gallon
The City of Big Shoulders muscles to the top when it comes to taxing travelers. A major contributor is the city’s nearly 25% tax on daily rental-car rates. Filling up that rental car will cost you, too: With a state tax of 39 cents per gallon, gas prices in the Chicago area are among the highest in the U.S. Ouch!
2. New York: $38.65/day
- Hotel tax: 18.07%
- Rental-car tax: 19.88%
- Gas tax: $0.50 per gallon
- Tax on restaurant meals: 8.88%
- Beer: $0.14 per gallon
- Wine: $0.30 per gallon
- Liquor: $6.44 per gallon
Most tourists know that the Big Apple is a pricey place to stay, but you may not realize how expensive it is until you get your hotel bill. New York imposes an 18.07% tax on hotel rooms, boosting the average cost of a one-night stay to more than $330. Rental-car taxes are steep, too, plus you’ll pay an 18.4% tax on parking in a Manhattan garage (the median rate in midtown is north of $41 a day). Family trip? You’re probably better off buying your entourage a subway pass ($30 for a seven-day MetroCard) instead.
3. Boston: $35.32/day
- Hotel tax: 14.5%
- Rental-car tax: 23.78%
- Tax on restaurant meals: 7%
- Gas tax: $0.24 per gallon
- Beer: $0.11 per gallon
- Wine: $0.55 per gallon
- Liquor: $4.05 per gallon
You may want to tour historic Beantown on foot. Levies on rental cars soar to nearly 24% of your daily rate when a $10-per-day local rental-car fee is factored in. While Boston imposes an excise tax on beer, wine and liquor, alcoholic beverages are exempt from sales taxes, thanks to a voter initiative approved in 2011. Keep in mind that most cities are imposing sales taxes on alcohol in addition to the sin taxes listed.
4. Seattle: $35.11/day
- Hotel tax: 15.60%
- Rental-car tax: 17.2%
- Tax on restaurant meals: 9.5%
- Gas tax: $0.38 per gallon
- Beer: $0.26 per gallon
- Wine: $0.87 per gallon ($1.72 per gallon for alcohol content above 14%)
- Liquor: $26.45 per gallon
If you want to rent a car to tour the city and surrounding areas, make sure you factor in a rental-car tax of more than 17%. Washington also imposes above-average state gas taxes. In 2012, the Evergreen State privatized liquor sales but coupled the move with a tax increase on distilled spirits of up to $35.22 per gallon. The tax is paid by commercial establishments, but you can bet they’re sharing some of the pain with customers.
5. Nashville: $34.75/day
- Hotel tax: 17.62%
- Rental-car tax: 13.25%
- Tax on restaurant meals: 9.25%
- Gas tax: $0.21 per gallon
- Beer: $1.29 per gallon
- Wine: $1.21 per gallon
- Liquor: $4.40 per gallon
- Next: DESTINATIONS WITH THE LOWEST TAXES ON OUT-OF-TOWNERS
Nashville may be the capital of country music, but if you’re a tourist, prepare to pay big-city taxes. Music City USA charges a $2.50-per-night hotel occupancy tax on top of sales taxes, boosting the total accommodations tax to more than 17%. Taxes on restaurant meals are even higher than they are in New York. On the plus side, Tennessee’s gas taxes are below the national average.
1. Lowest Tax Bill -- Portland: $22.86/day
- Hotel tax: 12.5%
- Rental-car tax: 17%
- Tax on restaurant meals: 0%
- Gas tax: $0.31 per gallon
- Beer: $0.08 per gallon
- Wine: $0.67 per gallon
- Liquor: $22.73 per gallon
With no state sales tax, Portland (Ore.) is a destination city that is also a shopper’s paradise. You won’t pay sales tax on restaurant meals, either. Hotel taxes in the City of Roses fall below the average for the GBTA’s top 50 U.S. destination cities. Driving, though, will cost you: Rental-car and gas taxes are above average. In addition, you may want to skip martinis in favor of wine or beer. Oregon’s excise tax on liquor is nearly $23 a gallon.
2. Orlando: $24.94/day
- Hotel tax: 12.5%
- Rental-car tax: 10.01%
- Tax on restaurant meals: 6.5%
- Gas tax: $0.35 per gallon
- Beer: $0.48 per gallon
- Wine: $2.25 per gallon
- Liquor: $6.50 per gallon
Sure, you may spend a bundle at the Magic Kingdom, Disney MGM and SeaWorld, but Florida’s low sales taxes may help to keep your costs in check. Florida tacks a $2-a-day surcharge on rental cars, but Orlando’s rental-car tax is still below average for major destination cities, according to the GBTA.
3. San Diego: $25.72/day
- Hotel tax: 13%
- Rental-car tax: 8%
- Tax on restaurant meals: 8%
- Gas tax: $0.53 per gallon
- Beer: $0.20 per gallon
- Wine: $0.20 per gallon ($0.30 for sparkling wine)
- Liquor: $3.30 per gallon
San Diego stays classy by charging one of the lowest tax rates for rental cars of all major destination cities. Taxes on hotel stays are below average, too. However, you’ll probably want to rent a fuel-efficient car. California’s gas tax is the highest in the U.S.
4. Miami: $28.08/day
- Hotel tax: 13%
- Rental-car tax: 10.51%
- Tax on restaurant meals: 9%
- Gas tax: $0.35 per gallon
- Beer: $0.48 per gallon
- Wine: $2.25 per gallon
- Liquor: $6.50 per gallon
Visitors to Miami also benefit from Florida’s low tax climate. Taxes on hotels and rental cars are below average for major destination cities in the GBTA survey. But in most parts of Miami-Dade County, you’ll pay a 2% Tourist Development surtax on food and beverages purchased at restaurants, hotels, bars and nightclubs.
5. Phoenix: $29.04/day
- Hotel tax: 12.27%
- Rental-car tax: 14.68%
- Tax on restaurant meals: 8.3%
- Gas tax: $0.19 per gallon
- Beer: $0.16 per gallon
- Wine: $0.84 per gallon
- Liquor: $3 per gallon
Arizona’s low gas tax means you can afford to fill up and drive to the Grand Canyon. At day’s end, go ahead and have a margarita: Phoenix’s liquor taxes, along with taxes on wine and beer, are lower than those charged in many other big cities.
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