Excise taxes

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Excise tax

Excise taxes, also known as selective sales or differential commodity taxes, are levied for the sales of specific goods or services. Excise taxes are commonly applied to items such as motor fuel, alcohol and tobacco.^[1][2][3][4]

Excise taxes are considered indirect taxes because they are not charged directly to individuals. In most cases, the excise tax is paid by the producer or seller of an item. The cost of the tax is included in the sale price of the item and then passed on to the consumer. Generally speaking, excise taxes take one of two forms. For ad valorem excise taxes, a specific rate is levied for a certain item or service. For unit excise taxes, a set dollar amount per unit produced or sold is charged for the item.^[1][2][3][4]

Excise taxes are levied at all levels of government. Revenues from such taxes are relatively small, albeit significant. In 2010, excise taxes accounted for less than 10 percent of total federal tax revenues. Meanwhile, at the state level, excise taxes accounted for approximately 20 percent of total tax revenues.^[3][5][6]

A notable feature of excise tax systems is that they can "promote social policy objectives while raising substantial revenues." For example, some argue that excise taxes on alcohol and tobacco products can limit the use of these items. Opponents argue that the aforementioned "social policy objectives" should not be taken into account in the development of tax policy because "taxation should have a neutral effect on the market." Some opponents also argue that excise taxes are regressive (i.e., lower-income individuals pay a greater share of their income toward these taxes than higher-income individuals).^[3][6]

Common excise taxes, 2017[edit]

The tables below provide excise tax rates for motor fuel, alcohol and cigarettes in the 50 states as of 2017.^[1][2][3][4]

Common excise taxes, 2015[edit]

Motor fuel[edit]

The table below summarizes the excise tax rates for motor fuel in all 50 states, as well as the District of Columbia. Different rates apply to different types of fuel (i.e., gasoline, diesel and gasohol). In 2015, Pennsylvania levied the highest excise and total tax on gasoline at 50.5¢ per gallon. The total federal tax on gasoline is 18.4¢ per gallon.^[7]

Alcohol[edit]

The table below summarizes the excise tax rates for alcohol in all 50 states, as well as the District of Columbia. Different rates apply to different types of alcohol (i.e., liquor, wine and beer). In 2015, Washington levied the highest excise tax for liquor at $14.27 per gallon. For wine, Alaska levied the highest excise tax at $2.50 per gallon. Tennessee levied the highest excise tax for beer at $1.15 per gallon. The national medians for liquor, wine and beer were $3.75, $0.72 and $0.20 respectively.^[8]

Federal excise tax rates on alcohol vary according to the alcohol type, proof and packaging unit. For complete details, see here.^[9]

Cigarettes[edit]

The table below summarizes the excise tax rates for cigarettes in all 50 states, as well as the District of Columbia. National rankings range from one, indicating the highest tax, to 51, indicating the lowest. In 2015, New York levied the highest excise tax for cigarettes at $4.35 per pack. Meanwhile, Missouri levied the lowest such tax at $0.17 per pack. The national median cigarette excise tax in 2015 was $1.36 per pack.^[10]

In his fiscal year 2016 budget proposal, President Obama advised a $1.95 federal tax on cigarettes in addition to state taxes.^[11]

Common excise taxes, 2014[edit]

Motor fuel[edit]

The table below summarizes the excise tax rates for motor fuel in all 50 states, as well as the District of Columbia. Different rates apply to different types of fuel (i.e., gasoline, diesel and gasohol). In 2014, Pennsylvania levied the highest excise tax on gasoline at 40.7¢ per gallon. Meanwhile, California levied the highest total tax on gasoline at 46.5¢ per gallon (this includes both the excise tax and other applicable state taxes). The total federal tax on gasoline is 18.4¢ per gallon.^[7]

Alcohol[edit]

The table below summarizes the excise tax rates for alcohol in all 50 states, as well as the District of Columbia. Different rates apply to different types of alcohol (i.e., liquor, wine and beer). In 2014, Washington levied the highest excise tax for liquor at $14.27 per gallon. For wine, Alaska levied the highest excise tax at $2.50 per gallon. Tennessee levied the highest excise tax for beer at $1.15 per gallon. The national medians for liquor, wine and beer were $3.75, $0.72 and $0.20 respectively.^[8]

Federal excise tax rates on alcohol vary according to the alcohol type, proof and packaging unit. For complete details, see here.^[9]

Cigarettes[edit]

The table below summarizes the excise tax rates for cigarettes in all 50 states, as well as the District of Columbia. National rankings range from one, indicating the highest tax, to 51, indicating the lowest. In 2014, New York levied the highest excise tax for cigarettes at $4.35 per pack. Meanwhile, Missouri levied the lowest such tax at $0.17 per pack. The national median cigarette excise tax in 2014 was $1.36 per pack.^[10]

The federal government also levies an excise tax of $1.01 per pack. For more information, see here.^[9]

Recent news[edit]

This section links to a Google news search for the term "Excise + tax"

See also[edit]

• Taxes on the ballot
• Sales tax
• Personal income tax
• Corporate income tax
• Property tax
• Estate and inheritance taxes

External links[edit]

• Tax Policy Center
• Federation of Tax Administrators
• Tax Foundation

Footnotes[edit]

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