2008 Travel Tax Study

The business travel industry and the business community at large are increasingly concerned about the negative impact of taxes targeting travel-related services such as lodging, car rentals and restaurant bills. States, cities and counties across the United States facing budgetary constraints often turn to the customers of these services as sources of revenue to bolster general funds or pay for local projects unrelated to the services.

The argument is generally that these services are mostly used by out-of-town visitors, therefore it’s better to export the tax burden. The reality is quite different, says the National Business Travel Association.

First, local companies and citizens are hit directly by these taxes. Most companies spend the majority of their car rental and hotel budgets in the areas where they have offices or other facilities. Further, more than half of car rentals are from car rental companies’ local offices, rather than airport locations, suggesting that the majority of car rental customers are, in fact, local.

Second, the tax impact on out-of-town visitors often factors into travel decision-making. Cities, states or counties with the highest discriminatory travel taxes are likely losing business and may not even know about it. For example, more and more organizations that host meetings and major conventions are considering the tax burden for their attendees as a factor in the site selection process.

Calculating Travel Tax Data

To help the business travel community better understand the relative tax burden imposed on travelers in cities across the country, the NBTA Foundation—the education and research foundation of the National Business Travel Association (NBTA)—engaged American Economics Group Inc. (AEG), to collect and report detailed travel tax data on the 50 U.S. cities with the highest numbers of air passengers.

AEG calculated the amount of taxes paid by travelers who stay at a hotel, rent a car and eat restaurant meals for one day and one night. The study uniformly applies average prices (hotel room rate: $103.70, car rental: $76.60, daily meal: $82.03) for these items across all cities to create “apples-to-apples” comparisons and then calculates tax figures by applying local and state taxes to those average pre-tax costs.

Tax calculations begin with general sales taxes at the state, county, city and special tax district level. Next, discriminatory travel taxes and fees are added in. These taxes often include a bewildering combination of charges such as excise, occupancy, transportation, tourism, special, facility and capital improvement taxes, plus a long list of other taxes and fees, frequently imposed by overlapping jurisdictions.

The study offers several different sets of travel tax data. Charts 1 and 2 list car rental taxes in central city locations and then at airports.

Charts 3 and 4 list the combined taxes on lodging, rental cars and meals—including general sales taxes—in central city and airport locations, ranked from lowest to highest.

Charts 4 and 5 delve deeper into the tax data to show the burden imposed by discriminatory travel taxes above and beyond general sales taxes.

(Note: ARN has condensed Charts 3, 4 and 5 to show the top and bottom 10.)


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