Regulations

AGGRAVATION: Which States Levy Sales Taxes?

LCT Staff
Posted on July 8, 2009

As many states prepare their annual budgets, keep your eye on the prize. Some states have added sales taxes on service at the eleventh hour of budget crunching, which has blindsided operators in those states who now must collect taxes on their services.

Our industry is often looked at as a cash cow at budgeting time. Operators in New York began collecting sales tax on service June 1. The ink is still drying on what exactly is taxable, but they got a double whammy as they will need to include tolls in the taxable base.

Look at the list below and pay close attention to those states that neighbor your own that have sales taxes in place. Operators in New Jersey are battling to get their tax rescinded. Operators in Kentucky have stymied a sales tax measure until it likely comes up next year.

Once states begin collecting it, it is extremely difficult to get them to give it back. Competing with other forms of transportation becomes much more difficult when those businesses such as taxi and buses are not taxed like sedan and limousine services. In price sensitive areas, the tax can make or break the award of a contract.

Remember, when a client complains about a tax, you only need to explain that you do not charge the tax — you only collect it!

Alabama — Exempt

Alaska — Exempt

Arizona — Exempt

Arkansas — Exempt

California — Exempt

Colorado — Exempt

Connecticut — Exempt

Delaware — Exempt

District of Columbia — 5% on point-to-point within the District

Florida — Exempt

Georgia — 7% on average but varies among counties — check the individual county; Atlanta has 8% sales tax for limousine, sedan, bus, and taxi; (4% state remainder to counties)

Hawaii — .6%

Idaho — Exempt

Illinois — Exempt

Indiana — Exempt

Iowa — 6%, Des Moines; north part of state is 7%; the tax varies county to county

Kansas — Exempt

Kentucky — Exempt

Louisiana — 2% excise tax when you leave your operating jurisdiction

Massachusetts — Exempt

Maine — Exempt

Maryland — Exempt

Missouri — Exempt

Minnesota — Exempt

Michigan — Exempt

Mississippi — Exempt

Montana — Exempt

Nebraska — Exempt

New Jersey — 7% on trips that are solely within the state of NJ (if it crosses the border it cannot be taxed); gratuity is not taxed but parking and tolls are (Can we say double taxation?)

New Mexico — Differs county by county; Albuquerque, 6.75%; Santa Fe, 7% based on where the service originates

New York — Differs county by county and goes 6-8%

New Hampshire — Exempt

Nevada — Exempt

North Carolina — Exempt

North Dakota — Exempt

Ohio — 7.75% in Cleveland Differs from county to county

Oklahoma — Exempt for the companies that were licensed prior to 1998 new companies must collect 8%

Oregon — Exempt

Pennsylvania — Exempt

Rhode Island — Exempt

South Carolina — Exempt

South Dakota — 6%

Texas — Exempt

Tennessee — Exempt

Utah — Exempt

Virginia — Exempt

Vermont — Exempt

Washington — Exempt

West Virginia — Exempt

Wisconsin — Exempt but they do have a 5% state fee that can only be levied on 6-10 passenger limousines

Wyoming — 5%

Source: Linda Moore, LCT Magazine

LCT Staff LCT Staff
Comments ( 4 )
  • Dom

     | about 3 years ago

    is there an updated list of which states are exempt? From my affiliates I hear conflicting information for the same city, i.e. in Los Angeles, CA.

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