Taxation in the US: Excise tax (Part 1 of 2)

Excise tax in the United States is an indirect tax on listed items. Excise taxes can be and are made by federal, state, and local governments and are not uniform throughout the United States. Some excise taxes are collected from the producer or retailer and not paid directly by the consumer, and as such often remain "hidden" in the price of a product or service, rather than being listed separately.

Federal excise taxes and revenues.

Federal excise taxes raised $98.3 billion in fiscal year 2015 or 3% of total federal tax revenue.

Fuel.

Excise taxes on fuel raised $37.4 billion in fiscal year 2015. These fuel taxes raised 90% of the Highway Trust Fund (18.4¢ for gasoline and 24.4¢ for diesel fuel per gallon).

Airport & airway trust fund.

Excise taxes dedicated to the Airport and Airway Trust Fund raised $14.3 billion in fiscal year 2015. 90% of the excise tax revenue comes from taxing passenger air fares and the remaining 10% comes from air cargo and aviation fuel taxes.

Affordable Care Act excise taxes.

Excise taxes for the Affordable Care Act raised $16.3 billion in fiscal year 2015. $11.3 billion was an excise tax placed directly on health insurers based on their market share. The ACA was going to impose a 40% "Cadillac tax" on expensive employer sponsored health insurance but that was postponed until 2018, and later further postponed and eventually repealed before its rollout on December 20, 2019. Annual excise taxes totaling $3 billion were levied on importers and manufacturers of prescription drugs. An excise tax of 2.32% on medical devices and a 10% excise tax on indoor tanning services are applied as well. The same budget bill that repealed the Cadillac tax also repealed the medical device tax for all sales occurring after December 31.

Tobacco.

Excise taxes on tobacco raised $14.5 billion in fiscal year 2015. The tax equals about $1 per 20-pack of cigarettes.

Alcohol.

Excise taxes on alcoholic beverages raised $9.6 billion in fiscal year 2015.

Cannabis.

In 2020, state and local governments earned over $3 billion in tax revenue from cannabis taxes.