Arkansas cell phone taxes among highest in nation

Arkansans pay the second-highest percentage for wireless taxes in the country, but federal wireless fees have fallen for the first time since 2017, according to a new report out this week.

Taxes, fees, and government surcharges make up 32.17% of Arkansans’ wireless bills, according to a Tax Foundation report evaluating excise taxes and fees on wireless services.

The largest chunk of that percentage comes from the state-local rate of 21.34%, topped off by the Federal Universal Service Fund (FUSF) rate of 10.83%.

That’s down from the FUSF rate of 12.24% last year and is the first decrease seen since 2017, when the rate fell less than a percentage point from 6.64% to 6.34%, according to the report.

However, the federal rate has approximately doubled over the last two decades from 5.07% in 2003 to the current rate of 10.83%, the report shows.

The only state where wireless users pay more than Arkansans in taxes and fees on their bills is Illinois at 33.8%, while Idaho has the lowest wireless taxes at 13.7%.

Though the federal rate went down this year, the report observed a “sizeable” increase in state and local wireless tax rates, which offset the federal rate drop.

An average American household pays about $294 per year in wireless taxes, fees, and government surcharges, which is down from $305 last year, according to the report.

In all, wireless users will pay an estimated $12.6 billion in taxes, fees, and government surcharges this year, the report said. Of that $12.6 billion, $5.3 billion will come in the form of sales taxes and other consumption taxes, $3.8 billion in state and local fees for 911 and 988, which is the suicide hotline, and the final $3.5 billion will come from additional telecommunications-specific taxes, the report said.

The majority of adults depend on wireless as their sole means of communication, with 72% of all adults living in a wireless-only household as of 2022, the report found. Meanwhile, 78% of all low-income adults live in wireless-only households.

The report identified wireless taxes as regressive due to the fact that low-income households spend a greater percentage of their budgets on wireless services than high-income households, and spend a greater percentage of their money on wireless service taxes, according to the report.

Other states with the highest wireless fees were Washington, New York, and Nebraska. States with the lowest wireless taxes included Oregon, Montana, Delaware, and Nevada, with Idaho being the lowest.


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