The words "vacation" and "taxes" don't seem to go together, do they? Most people would prefer a vacation from taxes, not a vacation with taxes.
However, it is important to consider taxes and other fees when you create your holiday budget. Tax is already taken into account with gas prices and some air travel (see below), but many of your other potential travel expenses will be listed as base prices.
It has been estimated that the total costs of taxes and fees can increase the cost of your vacation by as much as 50%. With average holiday expenses for a family of four amounting to $4,580 according to American Express, taxes and fees can make the difference between an affordable break and a series of unpleasant surprises.
Consider these sources of extra costs as you plan your holiday:
- Airline Taxes and Fees – Currently airfares are advertised and sold with standard fees and taxes included, such as the September 11th Security Fee and the Federal Transportation Tax. Your receipt will show the amount of these surcharges that you paid with your ticket. (Note: This could change based on legislation proposed in 2014 that would require listing base prices and all taxes/fees separately.)
However, there are plenty of auxiliary airline fees, including baggage charges, change fees, in-person booking costs, and seat selection and priority boarding levies. Sites such as airfarewatchdog.com have relatively comprehensive tariff lists for most airlines. Take any likely fee differences into account as you shop fares.
- Hotel Taxes – Hotel taxes can add up to 20% onto your total bill, depending on how many layers of state and city duties apply. Each level of government can have a sales tax, and there also may be targeted levies where tourism taxes pay for local projects – because it is always popular to have visitors pay for your infrastructure.
Condos and home rentals are subject to some of the same taxes, but collection is not always enforced. For a fair comparison, ask for an estimate with fees included for any source of lodging.
- Food and Drink – Meal-related taxes are variable across the U.S., just as meal prices are. Typical pre-tax meal prices can be found online, and then add around 8-9% extra for an average tax (plus an adequate tip). You may be able to find the actual rate at taxfoundation.org or similar state/local websites for your destination.
- Activities – Resorts and other package destinations may have fees included or clearly outlined, but otherwise you are on your own. Theme parks and museums may have fees that are funding internal projects, so check with each destination to verify current prices including all taxes and optional fees.
If you plan to drive a lot, estimate your expenses using Gasbuddy.com or similar sites to find your fuel costs. In case you were wondering, the national average on combined state and federal gas taxes is just over $0.49 per gallon.
As you plan your vacation, remember to research if taxes and fees are included in any price, and if not, find out what a typical tax and fee structure is like. Give package deals the same level of scrutiny to identify extra costs.
A little foresight can help you avoid blowing your vacation budget partway through the trip. You do not want to make the choice between explaining to your family why you have to cut some of your plans short or overspending and regretting it later. Either way, somebody will not be happy – and that is no way to spend your vacation.
Need to file your taxes? Check out this site.