One of the most confusing and frustrating aspects of any cell phone plan is trying to figure out exactly how much you‘ll owe each month after taxes and fees are applied. Carriers love to advertise low teaser rates, only for the actual bill to be significantly higher.
T-Mobile is generally considered one of the more transparent and consumer-friendly carriers when it comes to pricing and fees. They were one of the first to include taxes and fees in the advertised price for some plans. However, T-Mobile still has a range of taxes, fees and surcharges that can add up to 10% or more to your bill depending on your plan and where you live.
In this article, we‘ll provide an expert breakdown of all T-Mobile‘s taxes and fees so you know exactly what to expect before signing up. We‘ll cover how T-Mobile‘s fees compare to other carriers, how they vary by plan and location, and provide tips to keep your bill as low as possible.
Types of T-Mobile Taxes and Fees
First, let‘s go over the different types of taxes, fees and surcharges you may see on your T-Mobile bill:
Sales Tax: Charged in most states on the pre-tax amount of your plan. Sales tax rates vary widely from 0% to over 10% depending on state and local rates.
Federal Universal Service Fund (FUSF): A fee that T-Mobile and all carriers are required to collect to support federal programs like Lifeline. The FUSF rate for 2023 is 7.4% of interstate and international charges.
Regulatory Programs Fee: Covers T-Mobile‘s costs to comply with government regulations. Typically around $1.60 per voice line.
Teleco Recovery Fee: Another carrier cost recovery fee, usually a few dollars per month.
911 and E911 Fees: Monthly fees in some states to fund emergency services. Usually less than $1 per month.
State and Local 911 Fees: Additional monthly 911 fees levied by some states and cities. Varies based on location but generally less than $1.
State Universal Service Fund: Some states also have their own USF surcharge, separate from the FUSF. Rates and rules vary by state.
Other State and Local Surcharges: Some cities and states have miscellaneous surcharges, such as a TRS fee to fund relay services for hearing impaired users. These are generally small fees when they apply.
Gross Receipts Surcharge: In a few states, carriers add a percentage fee to the overall bill to recover business taxes paid to the state. For example, Alaska has a 6% gross receipts surcharge.
That‘s a lot to keep track of! The exact mix of taxes and fees on your bill will depend on your location. According to tax software provider Avalara, as of 2023 there are over 11,000 different tax jurisdictions in the U.S. that carriers have to account for.
T-Mobile Taxes and Fees by Plan
Now let‘s look at how T-Mobile‘s taxes and fees vary on their most popular plans:
Magenta, Magenta MAX, and Business Unlimited Plans
The advertised prices for T-Mobile‘s flagship Magenta and Magenta MAX plans INCLUDE taxes and fees. This means the price you see is the price you pay, with no added taxes or surcharges on the base plan rate.
However, there are some caveats. Any device payments, insurance, or upgraded features are subject to taxes and fees on top of the advertised price. For example, Magenta MAX is advertised at $85/line for 3 lines, but adding device payments and protection could result in $5-10 in additional taxes and fees per line.
Essentials Plan
T-Mobile‘s budget-focused Essentials plan does NOT include taxes and fees in the advertised prices. You can expect to pay around 10-20% more than the base price after mandatory taxes and fees are added.
For example, Essentials is advertised at $30/line for 3 lines ($90 total). But with taxes and fees, the actual price is likely to be more like $33-36 per line ($99-108 total).
Prepaid and Pay-in-Advance Plans
T-Mobile‘s prepaid Metro by T-Mobile brand includes taxes and regulatory fees in the advertised price. You pay exactly the sticker price as long as you stick to the base plan.
However, T-Mobile Connect, the company‘s bare bones prepaid offering, does not include taxes and fees. Expect to pay an extra 10-20% on top of the base $15 or $25/month price.
Legacy and Grandfathered Plans
Older T-Mobile plans like Simple Choice and T-Mobile ONE generally do not include taxes and fees. These will be added as separate line items and typically add up to 5-15% on top of the base plan price.
One exception is T-Mobile ONE All In, an old promo plan that included taxes and fees. If you‘re on an older plan, log in to My T-Mobile or check your latest bill to see your current tax and fee situation.
T-Mobile Taxes and Fees Compared to Other Carriers
To put T-Mobile‘s taxes and fees in context, let‘s see how they stack up against the other two biggest national carriers, AT&T and Verizon.
Verizon: Includes taxes and fees in the price of its flagship 5G Do More, 5G Play More, and 5G Get More unlimited plans. The Verizon 5G Start unlimited plan does not include taxes and fees. Verizon‘s prepaid plans also do not include taxes and fees.
AT&T: Does not include taxes and fees for any of its postpaid unlimited plans (Unlimited Starter, Extra, Elite) or its prepaid plans. AT&T‘s taxes and fees average 5-15% of the monthly plan charge.
Based on this, T-Mobile is arguably the most generous of the big 3 when it comes to including taxes and fees, since its most heavily promoted Magenta plans have them baked into the price.
However, the "Uncarrier‘s" budget offerings like Essentials do pass on taxes and fees to the customer. And as we‘ve seen, even on plans that include taxes and fees, you‘ll still pay extra on device payments, insurance and add-ons.
Still, T-Mobile deserves some credit for being more transparent and customer friendly in its approach to taxes and fees compared to its rivals. Including them in the price makes it easier for consumers to comparison shop and budget for their wireless expenses.
Estimating Your T-Mobile Taxes and Fees
Exactly how much you‘ll pay in T-Mobile taxes and fees depends on several factors, with location being the biggest variable. Tax rates and fees can literally vary by zip code.
With that said, we can give some ballpark estimates. According to T-Mobile, customers on plans that don‘t include taxes and fees typically pay an additional:
- 10-20% for unlimited plans
- 5-15% for most limited/metered data plans
- $4-7 per line in plans with per-line fees
So for example, if you‘re on the Essentials unlimited plan with 4 lines at $27/line ($108 total), your taxes and fees are likely to be in the range of $11-22. That would bring your actual monthly total to $119-130.
Here are some more specific examples of average state and local tax and fee rates for T-Mobile according to tax software provider Avalara:
- California T-Mobile customers pay an average of 16.9% in state and local taxes and fees
- Texas customers pay an average of 13.4%
- Florida customers pay an average of 14.8%
- New York customers pay an average of 17.1%
- Illinois customers pay an average of 17.7%
These are just averages – your actual rate will depend on your specific location and plan. But it gives you a sense of how much variability there is. State and local rates can swing your bill by $10 or more per month!
If you want to estimate your T-Mobile taxes and fees even more precisely, you can try using T-Mobile‘s own taxes and fees calculator. Just enter your address and it will give you an itemized estimate of the taxes, fees and surcharges for different T-Mobile plan options.
You can also get a quote for your taxes and fees using T-Mobile‘s website before checking out. In the cart, just below the plan selection, there‘s a link that says "See how much you‘ll owe in monthly taxes & fees." Click that and enter your address for an estimate.
Tips to Minimize T-Mobile Taxes and Fees
While you can‘t avoid taxes and regulatory fees entirely, there are a few things you can do to keep them as low as possible:
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Choose a plan that includes taxes and fees if possible. The Magenta plans are the best bet for postpaid, and Metro for prepaid.
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Avoid adding extra features or services that are subject to taxes and fees, like device insurance.
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Consider using an autopay credit card that gives bonus rewards for cell phone bills, like the Ink Business Preferred. You can earn 3x points on the taxes and fees too.
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If you‘re a senior 55+, military, or first responder, you may qualify for special plans with lower base rates and lower taxes and fees.
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Don‘t go overboard buying or financing devices you don‘t need. Device payments are always taxable, inflating your bill unnecessarily.
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If you live in a high tax area, consider a prepaid plan that includes taxes and fees in the base rate.
Ultimately, paying some level of taxes and fees is just a reality of cell phone service in the U.S. But by understanding how T-Mobile‘s pricing works in relation to taxes and fees, you can make more informed choices and keep your bill as predictable and affordable as possible.
