How to Reduce your Cell Phone Bill & Cell Phone Taxes

The average amount paid by Americans as part of their cell phone bill taxes is around 16.8% of their cell phone bill and this includes Federal, State and Local taxes. At the same time, the average tax paid on products and services is around 6.9% in America. So why do we have to pay such high cell phone bill taxes? Congress has tried to pass laws trying to reduce the tax we pay on our cell phone bills but it never happened… yet. Instead, some states such as Baltimore are charging its 250,000 something cell phone subscribers an additional $3.50 tax. So, what do the rest of us do to reduce your cell phone bill taxes?

Well, we got a tip for one of you loyal readers of AskStudent. One of our readers who went to College in Oregon at Oregon State University transferred to University of Florida(UF). He changed his billing address and everything to reflect his new Florida address. So imagine his surprise when he received his cell phone bills. He had a T-Mobile 600 minute Nation wide long distance plan for $39/month. And after Oregon Cell phone tax of 7.75%, he paid a grand total of $42 for his cell phone bill while his roommate with a Florida Cell phone number, for the exact same plan paid $47.42 after Florida taxes of 21.60%, the second highest in the country.  Which means our tipster, if he and his roomie kept the exact same plans would be saving around $260 by the time he is done with college.  Now mind you, the $39 plan is the cheapest cell phone plan provided by T-Mobile. So the higher your cell phone bill, the more you will be saving.

So how to reduce your cell phone bill taxes?

Well, from the above example, most cell phone carries such as TMobile, At&T , Verizon and Sprint do not seem to base their taxes on the billing address of their customers but instead base it on the area code of their customers cell phone. So, if you want to lower your cell phone taxes, look up our cell phone taxes by state article and find a state with the lowest cell phone bill tax and call up your cell phone provider and do the needful.

Is this legal? Well, I am no lawyer and it might be illegal after all but some research later, the relevant Federal law is the Mobile Telecommunications Sourcing Act, which went into effect in 2002. According to this act, cell phone users are supposed to pay taxes in their “area of primary usage”. For our tipster, the area of his primary usage is presently Florida and not Oregon. However, it might not be illegal in his case because he wanted to keep his old cell phone number and did not want a new number in Florida. So, I think the ball is in cell phone providers hands who should be charging according to billing address and not the area code of their customers cell phone number.

As stated earlier, this might be illegal but I would suggest that you look up our Cell phone Taxes by State article and call up your carriers customer service and see if they go through with your plan of shifting to a state which charges lower cell phone bill taxes.

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  • Tim

    Baltimore’s not a state…

  • rdw

    Just to point out it varies by carrier how they charge state taxes. Verizon charges you on the area code you use most, not the area code you yourself have. Even though I have a Nevada area code, I still get charged WI state taxes because I call and receive that area code the most.

  • http://www.cellbills.com Chad

    We think it is a very interesting point. Yes you can have a lower cell phone bill taxes based on the sate that you live in. We see this every day when people come to our site to have their cell phone bill audited. The truth of the matter is that cell phone users are supposed to pay taxes based on their area of usage, but there are still a ton of mistakes made on cell phone billing regarding taxes. Make sure that you are paying the right taxes on your cell phone bill. It is not unusual for Carrier to miss bill the tax cost of your bill.

    We really recommend that companies review this. At CellBills.com, we see a lot of companies miss billed for their corporate cellular cost. The miss billing of taxes is somewhat common. What we tell our customers at http://www.cellbills.com is to allow us to do the review for them. We let our Customers see their savings evaluation for free. One of the things we look at is tax cost.

    Family Circle Magazine just recommended us to their readers this week for the best place to reduce cell phone cost fast so we know how to lower cell phone cost. The article you wrote is very interesting and definitely brings attention to an area that people should be monitoring on their cell phone bills, well done. Thanks for the heads up, and your readers should appreciate you bringing this to their attention. Most people and companies never think to question if their cell phone bills tax are correct.

  • Jason Boxman

    Unless you’re a data slut, you can always go prepaid and avoid the taxes entirely. No contract, either. I’ve been happy with T-mobile for years for prepaid.

  • Kimberly

    I just moved in and for now, I’m keeping my Net10 phone as my primary phone for the time being – its just so much cheaper. Without having to worry about a landline for now, I can still enoy the savings Net10 gives me each month – more than $65+ a month over my old bill. The TMobile network is still solid and I have great reception in my apartment so no need to give it up yet. Not to mention, my Samsung slider, despite not having the best battery life, is still a very dependable phone and has survived being dropped during the move nearly 10 times. If a phone company can give me a deal like Net10, then I’m on it.

  • tidus

    NO landline just a tracfone.. seemed the cheapest way to go and to have a cell phone on a trip is worth alot if you need assistance for an emergency.. cell phone is a necessity in some cases.. unless you never leave your home.
    Really mad about the added taxes, used to be no taxes a few years ago now its like taxed more than booze and cigarettes.. thanks to our politicians and their infinite wisdom.

  • Omayra

    I wish the author would have discussed my situation. I live in Arizona and have a New York cell phone number. Sprint recently began charging me state and local taxes for both states. I believe this practice to be illegal and I am going to check further into FCC code.

  • Lynn

    When did Baltimore become a state?

  • oliver two

    @oliver:
    Cell phone is not a necessity, it’s a privilege. So, in Florida, you get high-taxed for things that you can live without, while in Oregon, you get jacked up for thing that you cannot live without (property taxes in Oregon are outrageous, and the idea to tax motorists by their mileage is pretty obnoxious..)

  • oliver

    What is really interesting is that in so-called ‘tax-hating’ conservative Florida, the taxes are so much higher than in the ‘Peoples Republic’ of Oregon.

    Remember this when Bill-O tries to tell you that the Republicans will lower YOUR taxes.

    They’re only interested in lowering THEIR OWN (White, Upper Income Bracket) taxes.

    • RealDeal

      I agree that it is funny that Florida has one of the highest state cell phone taxes, but making the leap that is the Rep fault and not the Dem? My wife on FULL PMS can’t make irrational leaps like you have! WOW?
      You know, that tax increase could have passed when the Dems were in power or another thing to remember is NOT ALL Rep are conservative. Look at John McCain (very liberal to middle of the road politically speaking). The Conservative movement nor the Tea Party really have their own “Party”, however they do side with the Republican Party because it would be their best chance of passing legislation that they favor just like the progressive movement, socialist & communist movements have taken over the democratic party in order to get legislation passed that favors their agenda. Those middle of the road candidates and voters might sometime down the road have to either choose a side or create their own party.

      All-In-All: Taxes are way too high on everything!!!

  • James

    While calling international the price was equal for cell and land line connections, now when prices are advertised it’s rate is only on land lines and to call a cell phone the cost is about .25 cents

  • Queen

    What’s the point!!! Are you going to now contact your cell phone carrier and tell them that your are moving to one of the cheaper tax states to get the discount. Then you would have to trust some one down there to get your mail. If you dont have anyone in that state you would have to get a P.O. Box which is gonna cost you any way. Or you can have the post office forward your mail from the cheaper state to the state where you live. It’s just too much of a hassle when you think about. To Mr. Nostradomas…That’s the absolute dumest thing I’ve ever heard. Cell phones have saved lives!!! Think about your car stalling and your stuck somewhere and it’s 0 below. What are you going to do walk to the nearest pay phone or flag a stranger down who might be a theif or serial killer. There a people putting feces, acid and God knows what orther chemicals on pay phones. Now a a days you can’t find pay phones when you need them and when you do find one you’re lucky if it works. Cell phones are so necessary and convienient. Imagine the people who died on 911, some were able to call their family members to tell them that they loved them before they died. My exboyfriend was the same way. He was extremely selfish, a user and not lawyal. I find that men who don’t want cell phones have the same characteristics as my ex and are usually involved in some thing low down and dirty

  • Nostradamus

    What we really need to do is ditch the stupid cell phones any way… who needs them? I wouldn’t have one if it wasn’t bacause of my wife’s nagging to get it…
    That way we would show these morons who is boss…

  • http://www.unlockedcellphone.blogspot.com kam

    this is really interesting but i bet its illegal so i wouldn’t do this unless you are going to move to the area where u want ur cell area code to be in or at least know someone who lives there but over all its interesting to kno how cell phone companies charge taxes.