Excise Taxes in United States

Practical Information

Note: Some of this information was last updated in 1982

Federal, state, and local taxes imposed on acts, like the sale of specific goods or services or on licenses to engage in certain activities, rather than on property. For example, excise taxes are levied on the sale of gasoline and tobacco rather than on the items themselves. Excise taxes may be levied either against the seller or the purchaser. Manufacturers’ excise taxes are levied against persons who sell various articles, but admissions taxes and communications taxes are borne by the consumer. However, excise taxes paid by the consumer are usually collected by the seller and remitted by him to the taxing authority.

Federal excise taxes are deductible for federal income tax (in U.S. law) purposes only when paid or incurred as an ordinary and necessary expense of carrying on a trade or business, or incurred as “nonbusiness” expense. Nonbusiness expenses are ordinary and necessary expenses paid or incurred by an individual in connection with (1) the production and collection of income, or (2) the management, conservation, or maintenance of property held for the production of income, or (3) the determination, collection or refund of any tax.

State excise taxes are deductible as such for federal income tax purposes. Since these taxes are deductible as such and not as expenses, the deductibility

does not depend on whether the tax is connected with the taxpayer’s business or “nonbusiness” activities. State excise taxes are deductible by the person on whom they are imposed. However, a state tax separately stated may be deducted by the buyer even if it is imposed on the seller. The person on whom the tax is imposed depends on state or local law. Whether federal and state excise taxes are deductible for state income tax purposes depends on the tax law of the particular state. On January 2, 2011, the United States imposed a two-percent excise tax on payments received by foreign entities for the sale of goods or services to the U.S. government.

(Revised by Ann De Vries)

What is Excise Taxes?

For a meaning of it, read Excise Taxes in the Legal Dictionary here. Browse and search more U.S. and international free legal definitions and legal terms related to Excise Taxes.

Excise Taxes in State Statute Topics

Introduction to Excise Taxes (State statute topic)

The purpose of Excise Taxes is to provide a broad appreciation of the Excise Taxes legal topic. Select from the list of U.S. legal topics for information (other than Excise Taxes).

Finding the law: Excise Taxes in the U.S. Code

A collection of general and permanent laws relating to excise taxes, passed by the United States Congress, are organized by subject matter arrangements in the United States Code (U.S.C.; this label examines excise taxes topics), to make them easy to use (usually, organized by legal areas into Titles, Chapters and Sections). The platform provides introductory material to the U.S. Code, and cross references to case law. View the U.S. Code’s table of contents here.

Resources

Further Reading

• Information about Excise Taxes in the Gale Encyclopedia of American Law.

Excise Taxes, I.R.S. Pub. 510 and Tax Law

There are more details about Excise Taxes, I.R.S. Pub. 510 in thetax compilation of the legal Encyclopedia.