The airline industry has been one of the most affected sectors due to the pandemic. With the imposition of various regulations and travel restrictions, airlines have seen a significant decline in their profits. As a result, there have been numerous changes in their pricing and taxation policies. One such tax that plays a crucial role in deciding the cost of your airfare is the airline ticket excise tax.
What is the airline ticket excise tax?
The airline ticket excise tax is a government-imposed tax on the purchase of commercial airline tickets. It is a percentage-based tax that varies depending on the ticket’s base fare, the carrier type, and the destination.
The airline ticket excise tax was first introduced in 1971 as a means of financing the country’s aviation system. It was later modified in 1997 and is currently a 7.5% tax on the base fare of domestic and international flights.
How does it impact your travel budget?
The airline ticket excise tax can significantly impact your travel budget. The tax can significantly increase the cost of your airfare, especially if you’re flying long distances or opting for premium cabins.
For instance, if your base fare is $500 for a round trip, the airline ticket excise tax alone would be $75. If you’re traveling with family or a large group, the tax can add up to a substantial amount, making your airfare more expensive than you anticipated.
However, certain exemptions and waivers can help you save on the tax. For instance, if you’re flying on a non-commercial airline such as a private jet, you don’t have to pay the tax. Similarly, if you’re a member of the Armed Forces on active duty traveling for official business, you’re eligible for a tax exemption.
How can you minimize the impact of the tax on your travel budget?
While you cannot avoid the tax altogether, there are ways you can minimize its impact on your travel budget. One way is to plan your trip in advance and book your tickets as early as possible. Airlines typically offer lower fares when you book in advance, which means you’ll pay a lower tax amount.
Another way is to compare fares across multiple airlines and travel sites. Different airlines charge different fares for the same destination, and by comparing prices, you can find the best deal that suits your budget.
Conclusion
The airline ticket excise tax is a crucial factor that impacts the cost of your airfare. While you cannot avoid the tax altogether, you can take steps to minimize its impact on your travel budget. By planning your trip in advance, comparing fares across multiple airlines and travel sites, and exploring exemptions and waivers, you can travel cost-effectively and make the most of your travel budget.
