The Tax Bite
on Everyday Products….HOTELS

After you pay your taxes to the IRS in April, you may have want to get away for a few days. So you may have decided to spend a few nights at your favorite getaway.

What you probably don’t realize is how much you are paying in taxes again when you pay your hotel bill.

The consumer generally must pay a state sales and use tax on the hotel room of about 7 percent. Local occupancy taxes charge another 6 percent. This means the consumer directly pays at least 13 percent of the cost of a hotel room in taxes.

But that’s just the beginning. Out of what the consumer pays to the hotel, the hotel must pay federal and state income taxes, federal payroll taxes, sales taxes, capital gains taxes, unemployment insurance taxes, workmen’s compensation taxes, business license taxes and fees, utility taxes, local property taxes, and any local income taxes. The hotel must also pay federal and state excise taxes on its telephones.

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