The Real Cost Of Summer Vacation - Dont Get Buried In Taxes


Despite evidence that indicates that vacations lend themselves to happier, healthier employees, we’re still hesitant to leave our desks behind: most of us used only half of our eligible vacation time last year.

Reasons include fear of getting left behind and a little bit of cockiness: we don’t think anyone else can do what we do. An incredible seventeen percent of Americans didn’t use their vacation time because they were afraid of getting fired.

For those of us who do decide to take advantage of vacation time, it’s not always cheap. While there are cost efficient vacations available – you can even staycation at home – it will cost you to pick up and go this summer. According to American Express, the average vacation expense per person in the United States is $1,145, or $4,580 for a family of four.

When you’re calculating the cost of your vacation, don’t be fooled by the proposed cost on hotel rooms and airfare. What is often missing from those figures as you book can be significant: taxes. Travel-related taxes can boost your travel cost by more than 50%. These taxes are tacked on to anything from airline tickets to hotel stays to rental cars.

When it comes to domestic travel, taxes levied on travel-related services increased the total tax bill for a traveler by a whopping 58%. According to the Global Business Travel Association (GBTA), the most expensive U.S. domestic destination by travel taxes, is Chicago, followed by New York City and Minneapolis. Yes, Minneapolis. A recent 3% increase in the Motor Vehicle Rental Tax in Minneapolis helped push it “toward the top of the high-tax group for 2013″ said Joseph Bates, GBTA Foundation Vice President of Research. Bates referred to the trend of increasing taxes on travel in municipalities as “shortsighted.”

Hotel taxes can also push your costs up, sometimes as much as 20%, due to a combination of taxes. In New York City, for example, room rentals are subject to three taxes and one fee: the Hotel Room Occupancy Tax Rate (5.875%); New York State Sales Tax and New York City Sales Tax (combined rate of 8.875%) and the New York State Hotel Unit Fee ($1.50 per unit per day).

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