An ultra-high cell phone bill is an unwelcome surprise any time, but especially now as many are having to cut back to combat inflation. Besides that, who wants to spend an unnecessary $50 on a cell phone bill when you could use that for a fun meal, outing, or savings?
If you find yourself wondering your cell phone bill is so high, you are far from alone. While taxes on cell phone bills add up, there may be other things you can control. Here’s how phone bills work.
What caused my cell phone bill to increase?
Overall, cell phone bills are going down. Verizon’s plans have gone down an average of $10 per month, partly because 5G rollouts are decreasing monthly cell phone costs. But that still might not show up on your cell phone bill.
Cell phone bills can rise for many reasons. Adding a new line, increasing your service package, and late fees can all increase your monthly payment. But your bill may also go up for reasons that have nothing to do with you changing your plan.
Reasons your cell phone bill can increase
If you look at your phone bill, you’ll probably notice a section dedicated to a bunch of little fees that add up fast. A change in any of these fees can make your bill rise. These fees typically include taxes, overage charges, and roaming charges.
One of the biggest culprits behind rising prices has to do with taxes on cell phone bills. Anytime your state or the federal government raises cell phone taxes, your service provider passes the buck to consumers and you’ll see an increase in the taxes on the cell phone bill.
Fees and surcharges
Many phone carriers charge fees on top of your regular bill. These may include late payment fees, early termination fees, or restoration of service fees. Some phone carriers also tack on “monthly” or “service” fees or even illegally cram bills to increase revenue. If you need government help with your bills, there are services to help you find where to complain or who to ask for help.
Many people buy unlimited data plans to prevent extra charges for using data services. But the sneaky secret is that many unlimited data plans still have limits. After a certain point, some companies cap your data and charge you extra for using more data. Or they give you 3G and you have to pay more to actually use 4G or 5G. Read the terms carefully before signing up for a plan.
Promotion period ended
One common reason your cell phone bill may rise is because of a promotional period ending. Often, promotions expire without warning, and you may not notice until you’re surprised by your new, more expensive monthly bill. If you sign up for a new cell phone plan during a promotional offer, check the terms and expiration date, including the monthly costs once the promotion ends.
Why are taxes and fees so high on cell phones?
Despite the average service bill dropping 30% since 2008, cell phone bills have gone up. Much of this increase can be attributed to a roughly 50% increase in wireless cell phone taxes. While 25% of the average customer’s bill are taxes, the highest-paying states impose taxes up to 35%.
The main reason that taxes have increased so much has to do with the Internet Tax Freedom Act. This bill forbids federal, state, and local governments from taxing internet access. Thanks to this law — and decreasing landline use — states have turned to increasing taxes on cell phone bills instead.
How much are taxes and fees increasing my phone bill every year?
In most years, average cell phone taxes and fees rise at least a little, as you can see in the chart below:
|Wireless – State and Local Taxes Fees
|Wireless – Federal Taxes and Fees
|General Sales and Use Tax
Understanding the fees on your cell phone bill
Some fees, like late fees, are fairly explanatory. But other equally common charges, like universal service fund fees, are a little harder to understand. Let’s take a look at some of the fees you might run into with your cell phone bill.
The Federal Communications Commission (FCC) requires states to provide 911 services, which they pay for through mandatory 911 fees. You can find your state’s wireless 911 tax rate here.
Federal Universal Service Fund fees
The FCC charges wireless carriers Federal Universal Service Fund (FUSF) fees to:
- Support telecommunications services in schools, libraries, and rural healthcare facilities
- Keep local phone rates affordable
- Subsidize service to high-cost areas and low-income customers
While carriers aren’t required to pass this cost along to customers, many do anyway as a way to increase profits.
State telecommunications excise surcharges
The gross receipts tax surcharge or the state telecom excise tax surcharge is a monthly tax on cell phone bills. Carriers pass surcharges onto consumers to minimize or recover their state and local tax burden.
Consumers aren’t required to pay regulatory charges, but carriers often pass these fees onto consumers anyway. Essentially, carriers bill regulatory charges to cover the cost of complying with various government regulations.
Many carriers charge administrative fees to cover the cost of maintaining phone service and connecting calls across wireless networks. Some also charge long-distance administrative fees to defray the cost of interstate and international calls. Essentially, administrative charges can be anything the carrier wants to add to your bill.
State and local taxes
States, counties, and cities have the right to impose their own taxes on various wireless services, excluding the internet excluded. If your locale charges taxes, you’ll find taxes on cell phone bills, including detailed tax amounts.
Final thoughts on high cell phone bills
If you’ve found extra taxes on cell phone bills or are wondering why your phone bill is so high, you’re not alone. The main fees you can avoid are surcharge fees for international or roaming fees and overuse or going over your plan limit. You have government resources if you feel you’ve been overcharged unjustly.
Before signing up for a plan, carefully read all the terms, and don’t be afraid to ask questions. This is especially true if you decide to sign up for a promotion plan that may expire. Once you understand your plan and the surcharges, you’re also free to research other plans and consider switching cell phone plans.
How can you reduce fees on your cell phone bill?
Few of the required fees can be reduced or removed from your cell phone bill. Your best bet to cut fees is to consider reducing or removing insurance premiums for damaged phones or international calling service fees you don’t need.
Are regulatory fees mandated for cell phones?
The regulatory fees your cell phone carrier charges are the way the carriers pass government-mandated telecommunications business operating expenses on to the customer. It may be that at some point one carrier removes or reduces those fees to boost its competitive power, but no carrier has adopted that practice yet.
Why do cell phones have so many fees?
It may seem like cell phones have an inordinate number of fees. But before cell phones were invented, landline phones also charged unavoidable administrative and regulatory fees that jacked up your bill.