If you get local cable television service, you pay a monthly subscriber fee, but the charges don't stop there: Your bill will also break out federal, state and local taxes; the exact amount of each varies from one locality to the next.
Universal Service Charge
The federal government levies a "Universal Service" charge on telecommunications and cable providers, figuring the total charge as a percentage of the provider revenues. The providers pay the money into a pool dedicated to funding telecommunications service to rural and low-income customers, as well as to public facilities such as hospitals and libraries. The government adjusts the charge every quarter; the law does not require carriers to pass on the charge to customers, but they may do so at either a flat rate or as a percentage of the monthly bill.
State Sales Taxes
The individual states levy sales taxes on goods and services, which the cable providers pass on to consumers. In addition, the state or locality may charge a 911 fee to support emergency services, or levy a separate tax on cable services. If you have mobile phone service bundled with your cable, you'll also pay a 3 percent excise tax levied by the Federal Communications Commission.
Franchise Fees and Local Sales Taxes
Cable companies must also pay fees to local authorities for the privilege of operating a cable franchise in the area. A franchise fee is passed directly on to cable consumers, as are local sales taxes. By federal law, satellite TV providers are exempt from franchise fees and local sales taxes, but must collect sales taxes if the state mandates them.
You may be able to deduct taxes paid on your cable bill. The IRS allows you to deduct state sales taxes, either by listing the actual tax amount or by using optional sales tax tables provided by the IRS. In addition, if you use cable TV in your business, you can deduct that portion of the bill that you can apportion to business use. Stock traders, for example, may deduct the cost of cable broadcasting they must access for financial information.
- Comstock Images/Comstock/Getty Images
- Are City Property Taxes Deductible on Your Federal Tax Return?
- Can Dues to a 501(c)(3) Sports Club Be Tax-Deductible?
- Tips for Real Estate Agent Income Tax Deductions
- The Difference Between Tangible Taxes Vs. Property Taxes
- How Much Tax Is There in a Gallon of Gasoline?
- What Deductions from a Paycheck Are Reasonable for a Worker to Expect?
- Can You Do an Itemized Deduction of Sales Tax or Property Tax?
- Who Pays the Personal Property Tax on a Leased Car?