Taxing Your Sleep

After you finally completed your income tax return last April and mailed it off, you may have needed to get away for a few days. So you may have decided to spend a few nights at your favorite getaway. What you probably didn’t realize was how much you were paying in taxes again when you paid your hotel bill.

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

But that is just the beginning. Out of the amount the consumer pays to the hotel, the hotel must pay Federal income taxes, 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.