Remember to factor in city tax rates when budgeting for your next vacation

May 18, 2014 

You’ve probably included the cost of a room in a hotel or resort, a rental car, some nice dinners, and a few souvenirs in your travel budget. But taxes on hotels, rental cars and restaurant meals are expected to cost travelers nearly $30 per day, on average. “For a family of four that might have budgeted $1,000 for their trip, they could end up $100 or $200 over budget,” says Joseph Bates, vice-president of research for the Global Business Travel Association.

The city with the highest total tax burden, which includes general sales taxes as well as travel-related taxes, is Chicago, where travelers pay an average of $41.04 in taxes per day. Fort Lauderdale, Florida, has the lowest tax burden, at $22.61 per day.

Taxes on travel-related services have been on the rise since the 1990s, when protests against increases in property taxes led states, counties and other jurisdictions to search for ways to raise money without increasing the tax burden on residents. But the GBTA argues that residents feel the pinch, too, because locals eat in restaurants, stay in hotels for special occasions and rent cars when their own vehicles are in the shop.

Meeting planners increasingly factor in the cost of taxes when deciding where to hold conferences. For leisure travelers, though, figuring out the amount of taxes in a specific destination can be difficult, says Carol Kokinis-Graves, senior state tax analyst for tax publisher CCH.

State sales tax rates are readily available (see our “State by State Guide to Taxes,” at kiplinger.com/links/taxmap), and most large cities provide information about taxes and fees on their websites. But many smaller cities and jurisdictions that impose their own taxes may not even have a Web presence, says Kokinis-Graves.

Still, you can avoid some sticker shock by planning ahead. Websites such as Orbitz and Expedia don’t include taxes and fees in their initial quotes for hotel rooms, but once you select a specific rate and provide the dates of your visit, you’ll get the total cost. You don’t need to provide your personal information or credit card number to get this figure.

Websites for some rental-car companies and travel discounters will give you the total rental cost upfront; with others, you must select the car you want to reserve to get that information.

Renting a car at an off-airport location could also save you the airport concession fee — typically 11 percent to 13 percent of your total rate. Just be sure to factor in the cost of cab fare. Some cities tax that, too.

Sandra Block is a senior associate editor at Kiplinger’s Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com. For more on this and similar money topics, visit Kiplinger.com.

The News Tribune is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service