New State Tax Laws Take Effect Nationwide

For many states, July 1st marked the beginning of a new fiscal year and a slew of new tax laws have taken effect. The new tax measures are designed to generate additional revenue for local and state governments, which means many Americans will be feeling the pinch in their pocketbook. If you smoke, drive a car or buy things online, there’s a good chance you’ll be affected by one or more of these tax increases.

Gas Tax Hikes

With summer travel picking up, higher prices at the gas pump could put many taxpayers’ vacation plans on hold. Six states–California, Maryland, Kentucky, Vermont, Virginia and Connecticut–have passed laws that would increase gas taxes, with the tax hikes ranging from 2.5 cents to four cents more per gallon. In Kentucky, the increase means drivers will be paying around 32 cents per gallon in taxes while Californians will be paying around 39.5 cents more. In Connecticut, drivers can now expect to pay around 50 cents in tax for every gallon of gas.

Virginia also increased taxes on diesel fuel and there’s a new law in place that ties gas taxes to gas prices and inflation. If you’re thinking about switching to a hybrid or alternative-fuel vehicle to avoid the higher gas tax, you may want to think again. Virginia residents will now have to fork over a $64 annual fee to own these types of vehicles to make up for the lost revenue on gas sales. The additional revenue from the green vehicle fee will be earmarked to fund road repair and maintenance projects.

Sales Tax Increases

Currently pending action in the House, the Marketplace Fairness Act (MFA) would enforce a sales tax on online purchases. Not wanting to wait for the bill to become law, a number of states have already begun imposing sales tax on certain online purchases. In Minnesota, a 6.875 percent sales tax now applies to digital downloads, including e-books, ring tones, songs and movies. Iowa is also enforcing a six percent sales tax for residents on all Internet purchases in the state. In Maine, a five percent Internet tax is scheduled to take effect 90 days after the legislative session ends. The new online sales taxes are expected to bring in billions of dollars in additional revenue for these states.

New Taxes for Smokers

Minnesota smokers will now be paying even more to maintain their habit, since the state’s tax on cigarettes has more than doubled from $1.23 to $2.83 a pack. Compared to the $4.35 a pack tax that New York charges, it may seem like a bargain. Legislation is currently pending in California that would raise the cigarette tax by $2 a pack. President Obama has also proposed a tobacco tax, which would affect smokers nationwide.

Unusual Tax Laws

Not all of the tax laws that took effect this month were run-of-the-mill. Here’s a brief rundown of some of the more unusual taxes that are now in place in cities and states across the country.

• Bully Tax: In an effort to curb bullying and harassment, the town of Monona, WI passed the so-called “bully tax”, which imposes a $114 fine on anyone over the age of 12 who is caught bullying someone else. The fine goes up to $177 for subsequent violations and parents of minor children can also be fined for their child’s bad behavior.
• Slow Driver Tax: In Florida, holding up traffic may subject you to the slow driver tax. Motorists who are caught driving 10 miles or more below the speed limit in the fast lane will be hit with a $60 fine. The tax applies to slow drivers on highways and multi-lane roads.
• Service Taxes: Minnesota residents will not have to pay a sales tax on certain services, such as repairs for business equipment. The 6.87 percent sales tax is exempted for repairs on home office equipment.

Not every state raised taxes. Tennessee lowered the sales tax on food from 5.25 percent to 5 percent and Arkansas reduced income taxes by one-tenth of one percent. While the tax cuts may not seem like much, they give taxpayers a little more financial breathing room.