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Although bed taxes in tourist-heavy communities across Florida can be painfully high, the state has a relatively low tax on rental cars compared to other states, according to a new report from te Tax Foundation.
With a rate of 4%, Florida’s rental car tax rate is tied for No. 30 among 44 states that excise taxes on rental cars, the study shows, and only nine states in the country charge lower rental car taxes. Oregon, California, Idaho, Nebraska, Georgia and Ohio do not excise taxes on rental cars.
Minnesota charges the highest rate, at 14.2% percent, and Alabama’s rates are the lowest, at 1.5%, the report shows. Florida is one of six states that charges an even 4% rate, along with Wyoming, Montana, Colorado, Missouri and Indiana.
According to the Tax Foundation report, these rental car taxes are placed on top of other taxes and fees, such as sales taxes and airport concession fees. As a result, the report states, “Consumers can pay taxes on their rentals of more than 30%.”
A lower rental car tax rate, on the flip side, can prove favorable for a state’s economic growth. Because out-of-state residents absorb much of the burden of these taxes, the study found travelers often look for strategies to avoid the additional excise tax. Therefore, states that tax rental cars can experience lower economic growth, according to the report.
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