It’s almost time for the third batch of monthly child tax credit payments. The first two payments were sent on July 15 and August 13, while the next payment is scheduled for September 15 – that’s this week! The IRS will also be sending out additional payments every month through the end of the year.
For parents who received their first child tax credit payment in July, the maximum monthly payment for each child 6 to 17 years old is $250 and $300 for each kid under age 6. That’s the most you can get, but families with higher incomes won’t receive that much or could be denied the credit altogether. (Use Kiplinger’s 2021 Child Tax Credit Calculator for an estimate of your monthly payments if you got your first payment in July.)
If you get your first monthly payment after July, the maximum payment amount is higher. That’s because you’ll still receive the same amount of money in 2021 (i.e., 50% of your total child tax credit for the year), but it will be paid in fewer installments. For example, the maximum monthly payment for a family that receives its first payment in September is $375-per-child for kids ages 6 through 17 and $450-per-child for kids under age 6. Again, however, wealthier families will get less or nothing at all.
Methods of Payment
In most cases, monthly child tax credit payments are being directly deposited into each family’s bank account. That’s how you’ll get paid if the IRS has bank account information from:
Your 2019 or 2020 tax return;
The IRS’s online tool used in 2020 by people who aren’t required to file a tax return to get a first-round stimulus check; or
A federal agency that provides you benefits, such as the Social Security Administration, Department of Veterans Affairs, or the Railroad Retirement Board.
If the IRS doesn’t have your bank account information, it will send you a paper check or debit card by mail.
You can use the IRS’s Child Tax Credit Update Portal to change the bank account information the IRS has on file. It’s too late to make bank information changes for the September 15 payment (the deadline was August 30), but you can make changes for the October 15 payment by October 4. Note that your entire monthly payment must be deposited into one bank account – you can’t be split them between multiple accounts.
Families who are currently scheduled to receive payments by mail can also sign up for direct deposit using the Child Tax Credit Update Portal to add their bank account information (again, it’s too late to do this for the September 15 payment). You’ll be asked to provide your bank routing number and account number and indicate whether it’s a savings or checking account. You’ll get paid much faster if you switch to direct deposit, plus you won’t have to worry about a paper check or debit card getting lost or stolen.
If you’re receiving monthly child tax credit payments in the mail, you can use the portal to update your mailing address. This will help families receiving paper checks avoid mailing delays or having your payment returned as undeliverable. Once again, the deadline for changing an address for the September 15 payment has come and gone, but you still have time to revise your address for future payments.
Opting Out of Monthly Payments
Some people would be better off if they didn’t receive monthly child tax credit payments. For example, if you want the highest tax refund possible when you file your tax return next year, the monthly payments are going to bring down that refund. If you won’t qualify for the 2021 child tax credit – e.g., your 2021 income is too high, someone else (e.g., an ex-spouse) will claim your child as a dependent in 2021, or you live outside the U.S. for more than half of 2021 – you might end up having to pay back some or all the money you received as monthly payments when you file your return next year.
If that’s you, you can opt-out through the Child Tax Credit Update Portal. As you may have guessed, it’s too late to opt-out of the September 15 payment, but you can still opt-out of the remaining monthly payments for the year. For more information on the opt-out process, see How and When to Opt-Out of Monthly Child Tax Credit Payments.
Source: thepennyhoarder.com
Lili is totally free, and its digital tools help you save for taxes, take payments from clients and keep track of your expenses — all in the same account. It also allows you to overdraft your account without hitting you with costly fees. And Lili just added new business tools designed to help independent workers like you save time and money.
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. He’s also a freelance writer on the side, and he knows what a pain freelance taxes are. Privacy Policy
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The next round of child tax credit payments is scheduled for September 15. Additional payments will continue to follow each month through the end of the year. However, for some families, the monthly payments aren’t needed and, in certain situations, might actually trigger a financial hit down the road (see below). That’s why the tax law permits parents who don’t want or need the money now to opt-out of the monthly child tax credit payments altogether.
If that’s what you want to do, use the IRS’s online Child Tax Credit Update Portal to unenroll from the monthly payment program. (Note that you’ll need an existing IRS username or an ID.me account to access the portal.) But be aware that there are deadlines each month if you want to opt-out before the next payment arrives. Generally, you need to unenroll by at least three days before the first Thursday of the month in which the next payment is scheduled to arrive (you have until 11:59 p.m. Eastern Time). That means you need to opt-out by August 30 if you don’t want to receive the September 15 payment.
For married couples who file a joint tax return, both spouses must opt-out if you want to completely shut down your monthly child tax credit payments. If only one spouse opts out, you’ll still get half of the joint payment you’re scheduled to receive.
Reasons for Opt-Out of the Monthly Child Tax Credit Payments
Depending on your income, if you started receiving child tax credit payments in July, your monthly payment can be as high as $300 for each child in your family who is five years old or younger or $250 for each kid six to 17 years of age. (Larger payments could be sent if you begin receiving monthly payments after July.) That can add up to a lot of extra money in your pocket. For example, if you have three kids ages two, seven, and eleven, you could get up to $800 from the IRS each month if you started receiving payments in July.
So, you may be wondering why anyone wouldn’t want an extra $250 or $300 per child each month. Extra cash is usually something that people like, right? But there are various reasons why you might want to opt-out of the monthly payments if you really don’t need the money now.
The payments are really just advance payments of the child tax credit you would otherwise claim on your 2021 tax return. If you continue to receive the payments, your total monthly payments will equal 50% of the total credit amount you would otherwise be entitled to claim on your 2021 tax return. You will then claim the other half when you file your 2021 return next year. However, if you only claim half the credit on your tax return, that’s going to lower your tax refund or increase the amount you owe. So, for people who always want a big tax refund or hate writing a check to the IRS each year, opting out of the monthly payments might be a good idea. That way, you’ll be able to claim the full credit on your 2021 tax return and boost your refund/lower your tax bill as a result. (Note: We generally don’t recommend trying to artificially inflate your tax refund, since that essentially amounts to giving Uncle Sam an interest-free loan.)
You also might want to opt-out to avoid having to pay back all or a portion of the monthly payments you received. Generally, the amount of each payment is based on your 2020 or 2019 tax return (whichever one was filed most recently). However, the total amount of your child tax credit will be based on information found on your 2021 return. As a result, if your circumstances change in 2021, you could end up getting more than you should in monthly payments. This can happen, for example, if you earn more money in 2021 or you can no longer claim a child as a dependent this year (e.g., because of alternating custody under a divorce decree). Depending on your income, you may be required to pay back the overpayment, or at least some of it. For more on the payback requirements, see Warning: You May Have to Pay Back Your Monthly Child Tax Credit Payments.
The Future of Monthly Child Tax Credit Payments
If you opt-out of the monthly child tax credit payments now, you won’t have to worry about them for the rest of the year. But what about next year? Will you have to make that decision again?
In addition to authoring monthly advance payments, Congress made other changes to the 2021 child tax credit, too. For example, the total credit amount was increased, the age for an eligible child was raised to 17, the credit was made fully refundable, and the $2,500 earnings floor was removed. A second layer of phase-outs was also added to prevent wealthier families from claiming a larger credit.
As it stands right now, these enhancements only apply to the 2021 tax year, but President Biden wants to extend most of them through 2025. (The credit would be fully refundable on a permanent basis under the president’s plan.) We don’t know yet if that will happen. There’s a lot of political wrangling that will have to take place before the credit improvements are extended, but it’s certainly a possibility while Democrats control both houses of Congress and the White House.
We’ll continue to monitor the situation and report any further child tax credit developments. In the meantime, you can read up on all the changes for this year’s credit at Child Tax Credit 2021: How Much Will I Get? When Will Monthly Payments Arrive? And Other FAQs.
If you’re a Lyft or Uber driver, you already know how important it is to track your mileage and expenses.
You’ll need that information come tax time to make sure you’re squeezing out every last penny in deductions.
But rideshare drivers aren’t the only people eligible for mileage tax deductions. If you drive your personal vehicle for other kinds of paid work or use it for charitable, moving or medical purposes, you may also qualify for a standard mileage rate deduction.
Back in the old days, tracking mileage meant pulling a crumpled notebook out of the glove box and hoping your pen wasn’t out of ink.
But now there’s an app for everything — including mileage tracking.
Here are our favorites.
7 Mileage Tracker Apps We Love
These apps will help you stay on top of all the business miles you travel, so you can reduce your tax liability when it’s time to pay Uncle Sam. And you can try out most of them for free!
1. Everlance
Everlance is a versatile app that not only tracks your mileage but also helps you keep track of all your other business expenses.
Features include:
Automatic Tracking: Everlance detects when your car starts moving and records the miles you drive with background tracking.
Mileage Classification: With a quick swipe of your finger, you can categorize each trip as work-related or personal. You can also set your work hours, automatically classifying drives during those hours as business trips.
Expense Tracking: Sync your bank account or credit card to the app to keep track of other business expenses. Everlance will scan your expenses and note which ones might qualify as tax write-offs.
Data Reports: Get Excel or PDF reports of your mileage and business spending to make everything easy when it’s time to file your taxes.
Save for Taxes: Connect Everlance to your bank and set up automatic saving withdrawals so a percentage of your income gets put aside for taxes.
Everlance has three pricing tiers for self-employed users:
Free Plan: Pay nothing to track 30 automatic trips a month. You’ll also get unlimited manual tracking for trips, receipt uploads and IRS-compliant reports.
Premium Plan: For $60 a year or $8 a month, you’ll get unlimited automatic trips a month. Premium features include the ability to sync your credit and debit cards, receive PDF and Excel reports and get a deduction finder.
Premium Plus: For $120 a year or $12 a month, you’ll get all the features of the Premium level, plus individual training with an account manager and VIP customer support.
Everlance also has three pricing tiers for business owners:
Free Plan: You’ll get 30 automatic trips a month per user, for an unlimited number of users. You’ll also get unlimited receipt uploads, reimbursement and expense reports, team analytics and a central administrator dashboard.
Business Plan: For $120 a year or $12 a month, you’ll get credit card or bank account syncing, insurance verification add-ons, VIP customer service and user trainings.
Enterprise Plan: You’ll need to schedule a meeting to discuss costs for the Enterprise Plan. This service tier includes bulk management of named locations and expense categories along with a dedicated onboarding and customer success manager.
Everlance is a nice mileage tracker option for freelancers, entrepreneurs and small business owners who could benefit from extra features to help cut down their tax bill.
Download Everlance from the App Store or Google Play.
2. Stride
Stride is a free app that runs in the background, quietly logging every mile you drive, and then generates an IRS-ready report that you can use to do your taxes.
Features include:
Automatic Tracking: Stride will automatically track your mileage without you having to manually indicate the start or stop of a trip.
Expense Tracking: Keep tabs on other business spending by taking photos of receipts. Stride’s tax experts will help identify potential tax-deductible expenses.
Data Reports: Be ready for tax time with IRS-compliant summaries of your mileage and other deductible expenses.
Stride is a great choice for independent contractors and self employed individuals looking for a simple app to track mileage and business expenses with ease.
Download Stride from App Store or Google Play.
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3. TripLog
TripLog helps individual workers and companies alike cut down on administrative work by automatically tracking miles, recording incurred business expenses, streamlining timesheets and more.
Some of its features include:
Automatic Tracking: Record mileage multiple ways. You can track trips automatically as the app runs in the background on your phone, or you can use car bluetooth technology or a car USB device. There’s also the option of tracking trips manually.
Mileage Classification: Easily distinguish between business or personal trips. You can even set your work hours to automatically classify trips during certain hours as business trips.
Route Planning: Prepare for the day’s routes ahead of time.
Frequent Trip Rules: Automatically categorize trips you drive frequently.
Expense Tracking: Track expenses like gas, tolls and business dinners using this app.
TripLog Timesheets: Your employees can use this feature to clock in and out and submit timesheets.
Data Reports: Get tax-compliant reports to deduct mileage and other expenses when filing your tax return.
TripLog has four price tiers:
Lite: This is TripLog’s free version. It allows a single user to track up to 40 trips or expenses a month manually.
Premium: This option is for up to 10 users and costs $4.99 per user per month, or $59.99 if billed annually. It automatically tracks mileage. You can also record expenses like fuel and meals.
Premium + Time: This option is for up to 10 users and costs $8.33 per user each month, or $99.99 billed annually. In addition to the features of the Premium plan, it includes time tracking, a clock-in/clock-out timesheet and more.
Enterprise: This option is available for 11 or more users. You’ll need to contact TripLog to discuss pricing. With this version, you’ll get extras like an administrator console and integration with popular tax and accounting software like QuickBooks and ADP.
TripLog is a good app for owners of small businesses who have mobile employees, in addition to self-employed individuals looking to keep tabs on mileage and other expenses. Its many features that help business owners cut down on administrative work makes TripLog stand out from other apps.
Download TripLog from the App Store or Google Play.
4. Hurdlr
Hurdlr automatically tracks mileage and identifies tax deductions. You can connect this app to your financial institution to keep up with your income and expenses.
Features include:
Automatic Tracking: Hurdlr detects when your vehicle starts and stops automatically.
Mileage Classification: Designate which trips are business and which are personal.
Expense Tracking: Keep tabs on business spending by syncing to your bank and having the app automatically categorize certain recurring expenses (like tolls and car washes if you’re a rideshare driver) as business expenses and tag them as potential deductions.
Tax Estimator: This feature helps you estimate what your tax obligation will be ahead of filing your quarterly taxes. It’ll also send you reminders about upcoming tax deadlines.
Data Reports: Get your mileage and expense data compiled into tax-compliant reports.
Hurdlr has three pricing options:
Free: This version includes unlimited mileage tracking, as well as the ability to add income and expenses. It also provides a tax calculations summary and a feature to export or email reports.
Premium: For $9.99 a month or $100 a year, you’ll get unlimited mileage tracking, as well as expense tracking and income tracking. You can set specific business hours and set up automatic tags for certain expenses. You’ll also get calculations for state and self-employment taxes.
Enterprise: This option is geared toward business owners, and you need to contact Hurdlr for pricing information. This version provides personal training and premium integrations.
If you’re a rideshare driver, independent contractor or entrepreneur, Hurdlr is a great option not just for tracking mileage, but to stay on top of your profit and tax obligations.
Download Hurdlr from the App Store or Google Play.
5. MileIQ
MileIQ automatically captures your drives and delivers a comprehensive mileage log whenever you need it.
Features include:
Automatic Tracking: MileIQ runs in the background, automatically keeping tabs on all the miles you drive.
Mileage Classification: You can classify your drives into categories like business or personal by simply swiping with your thumb to assign them to the correct list — or you can set your work hours and let MileIQ classify your trips automatically.
Frequent Trip Recognition: You can save recurring routes in the app so they’re automatically categorized.
Data Reports: MileIQ compiles weekly and monthly reports of your mileage. You can also create customized reports.
MileIQ has three price options:
Free: Track 40 trips per month with this free version.
Unlimited: Get mileage tracking on unlimited trips for $59.99 a year or $5.99 billed monthly.
MileIQ for Teams: This option allows tracking for multiple users with single billing. It includes volume discounts and expert customer support. Contact MileIQ for cost information.
MileIQ is ideal for individuals looking to ditch paper logs and go digital with automatic mileage tracking.
Download MileIQ from the App Store or Google Play.
Chris Zuppa/The Penny Hoarder
6. SherpaShare
SherpaShare advertises itself as the “ultimate rideshare driver assistant.” It helps you record how many miles you drive and other related expenses with little effort — and offers ways to increase your income and lower your expenses.
Features include:
Automatic Tracking: Stay on top of the amount of miles you drive without having to manually indicate when you start and stop trips.
Smart Driver Tools: SherpaShare helps you identify profitable routes and keep tabs on your hourly revenue and profit.
Expense Tracking: Record all the business spending you encounter throughout the workday.
Driver Savings: Get discounts on related products and services, such as insurance, in-car accessories and tax preparation.
SherpaShare has two versions:
Basic: Pay $5.99 monthly or get billed annually at $59.99 a year. This plan includes unlimited mileage tracking, profit charting and member savings.
Super Premium: This premium package costs $10 per month or $120 per year. You get all the features of the basic plan, plus priority support and exclusive discounts.
Consider this app if you drive for Uber, Lyft or another similar company. This app can also be useful for delivery drivers.
Download SherpaShare from the App Store or Google Play.
7. QuickBooks Self Employed
From Intuit, the maker of TurboTax, you can download QuickBooks Self Employed to track miles, organize expenses and estimate taxes.
Features include:
Automatic tracking: Log your miles automatically via GPS tracking. There’s also the option to add your trip manually.
Mileage Classification: Categorize business and personal miles with a swipe of your thumb.
Data Reports: Get detailed reports outlining your miles driven and potential deductions
Tax Estimator: This app will estimate your quarterly taxes for you.
QuickBooks Self Employed has three price tiers:
Self Employed: For $7.50 a month, you get automatic mileage tracking with categorization, tips to increase your tax deductions and calculations of your estimated quarterly taxes.
Self Employed Tax Bundle: For $12 a month, you get all the perks of the previous package plus the ability to pay your quarterly taxes online and file your state and federal tax returns.
Self Employed Live Tax Bundle: For $17 a month, you’ll enjoy all the benefits of the lower-tiered plans, plus access to real certified public accountants (CPAs) for year-round advice and a final review of your tax return.
QuickBooks Self Employed is perfect for solo workers looking to accurately record their miles driven and make it easy to file taxes.
Download QuickBooks Self Employed from the App Store or Google Play.
Top Features of Mileage Tracking Apps
When trying to decide which mileage tracker app would be the best for you, consider one with these top features.
Automatic Mileage Tracking
With automatic mileage tracking, you can just get in your vehicle and drive — no need to do anything to signal the start of the trip or make note of your odometer reading. Having automatic tracking saves you from having to track miles by hand, which is always a win in our book.
Mileage Classification
Mileage classification allows you to distinguish between personal and business trips. If you use your vehicle for work and personal purposes, it’s helpful to be able to easily categorize trips.
Be aware, only business mileage is tax deductible. If you’re dropping off a rideshare customer and then decide to visit a friend’s house for a break before picking up more passengers, you can’t deduct the miles driven to your friend’s place.
Tax-Compliant Data Reports
Mileage tracking apps that turn your miles driven into IRS-compliant mileage reports will make it easier to deduct your business travel expenses when it’s time to file taxes. Also if the IRS audits your tax return, these reports will be an accurate record of your mileage log.
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Why Should You Use a Mileage Tracker App?
If you’re going to deduct mileage from work trips on your taxes or you need to track mileage to get reimbursed for gas at work, mileage trackers can be very useful. You don’t have to worry about wasting time tracking your miles and writing down the details of trips with pen and paper.
Mileage trackers make it easy to stay organized and have all the information you need come tax time.
Independent contractors, entrepreneurs and small business owners can either keep record of all their actual expenses (like gas station receipts and parking stubs) or use the IRS standard mileage rate to determine the deduction amount for business travel. The rate for 2021 is 56 cents per mile.
If you drove 10,000 miles for business, for instance, you would be able to deduct $5,600 from your tax liability.
Pro Tip
The 2021 standard mileage rate for charitable purposes is 14 cents per mile. The rate for moving (for active duty military personnel) or medical purposes is 16 cents per mile.
People in the following lines of work should consider downloading a mileage tracking app:
Rideshare drivers
Delivery drivers
Truck drivers
Real estate agents
Airbnb hosts
Freelance photographers
Home health aides
Frequently Asked Questions
Use this Q&A to help you determine which mileage tracker to download.
What Is the Best App for Tracking Mileage?
All of the mileage tracker apps listed above come highly recommended. However, the best mileage tracking app for you will be one that fits your needs.
If you’re just looking for a simple app to track your mileage without added features like bank integration or money-saving tools for drivers, then Stride may be the one for you.
If you’re an independent contractor and would like your app to make it easier for you to nail down mileage deductions for filing quarterly taxes, try Hurdlr or QuickBooks Self Employed.
If you run a small business with a fleet of multiple vehicles, you might consider Everlance or TripLog.
Reviewing the features of each app listed above will help you determine which will be the best mileage tracker for you.
Is There a Free Mileage Tracking App?
Stride is the only completely free app on this list. However, Everlance, TripLog, Hurdlr and MileIQ all have a free version. You can test out the free version to see if you like the app before committing to paying for the premium version with more features.
What Is the Best Free Mileage Tracker App?
You really can’t go wrong with any of the mileage tracker apps we’ve discussed. Stride is completely free, but trying the free version or a free trial of the other apps are also a great way to go.
You’re not making any financial commitment, so you can also switch to one of the other mileage tracking apps if you try one and find it doesn’t serve you well.
The information on each mileage tracking app listed above will help you select the best mileage tracker for you.
How Do I Track my Mileage for Tax Deductions?
The brilliant thing about using one of these best mileage tracking apps is that they keep a record of your work travel so you can deduct business mileage with ease. You don’t have to worry about how to track your mileage. The app records it for you!
When deducting mileage on your tax returns, the IRS is looking for an accurate account of business miles driven. In addition to your mileage numbers, you should keep track of the dates of your trips, the places you travelled and the reason for the trip. Mileage tracker apps, like the ones listed above, will help you keep the required records.
Lisa McGreevy is a former staff writer at The Penny Hoarder. Nicole Dow is a senior writer at The Penny Hoarder.
Parents who are struggling financially are thrilled when they receive a child tax credit payment. For families that received their first payment in July, getting up to $300-per-child each month can mean the difference between poverty and survival for some families (parents who started receiving payments later could receive even more each month). While Americans had to wait several months for their first payment to arrive, additional payments are now being sent every month through the end of the year.
The IRS sent the second round of child tax credit payments to approximately 36 million families on August 13. Additional payments will follow each month through the end of the year according to the schedule below. As it stands right now, the payments won’t continue into 2022. However, President Biden and many Congressional Democrats want to extend them beyond this year. So, there’s a chance the IRS will still be sending monthly payments next year, too.
Schedule of 2021 Monthly Child Tax Credit Payments
PAYMENT
DATE
1st Payment
July 15, 2021
2nd Payment
August 13, 2021
3rd Payment
September 15, 2021
4th Payment
October 15, 2021
5th Payment
November 15, 2021
6th Payment
December 15, 2021
How Much Will Your Child Tax Credit Payment Be Each Month?
The monthly payments are simply an advance of the child tax credit you would otherwise claim on your 2021 tax return. In most cases, if you receive all six payments this year (i.e., from July to December), the combined total of all your payments will equal 50% of the credit you’re expected to qualify for on your 2021 return. You’ll then claim the other half when your file your tax return next year. (Note that the monthly child tax credit payment amounts don’t include the $500 credit available for older children, elderly parents, and other dependents.)
For 2021 only, the child tax credit amount is increased from $2,000 for each child age 16 or younger to $3,600 per child for kids who are 5 years old or younger and $3,000 per child for kids 6 to 17 years of age. If you received your first payment in July, that means the maximum monthly payment for each child under age 6 is $300 and for each child age 6 to 17 is $250. Note that families with higher incomes won’t receive that much or could be denied the credit altogether, but most eligible parents will see a considerable bump in their child tax credit for the 2021 tax year. (Use our 2021 Child Tax Credit Calculator to see how much you should receive each month if you’re first payment arrived in July.)
Families who get their first monthly payment after July will still receive 50% of their total credit for the year. As a result, the total payment will be spread over less than six months, making each monthly payment larger. For example, the maximum monthly payment for a family that received its first payment in August is $360-per-child for kids under age 6 and $300-per-child for kids ages 6 through 17.
Are Child Tax Credit Payments Taxable?
If you’re receiving monthly child tax credit payments, the IRS isn’t going to tax that money when you file your tax return next year. The payments are simply an advance of the child tax credit that you would otherwise claim on your 2021 return – they aren’t “taxable income.”
They still can affect next year’s tax bill or tax refund, though. Since they represent advance payments of the child tax credit, they’ll be subtracted from the credit amount you would otherwise be allowed to claim on your 2021 return. That will make your 2021 child tax credit smaller, which means either your tax bill will be higher or your tax refund will be smaller.
Opting Out of Monthly Child Tax Credit Payments
If you don’t want to receive monthly child tax credit payments, you can opt-out through the IRS’s Child Tax Credit Update Portal (although there are deadlines for opting out each month).
Why might someone want to opt-out of monthly payments? For example, to boost your tax refund, you may want to claim a larger child tax credit when you file your 2021 tax return next year. It also might be smart to opt-out if you no longer qualify for the child tax credit. This could happen if your 2021 income is too high, someone else (e.g., an ex-spouse) will claim your child as a dependent in 2021, or you live outside the U.S. for more than half of 2021. Otherwise, you might have to pay back some or all the money you received as monthly payments this year.
See How and When to Opt-Out of Monthly Child Tax Credit Payments for more information.
Payment by Direct Deposit, Check or Debit Card?
Most families will get their monthly child tax credit payments deposited directly into their bank account. That’s how you’ll get paid if the IRS has bank account information from:
Your 2019 or 2020 tax return;
The IRS’s online tool used in 2020 by people who aren’t required to file a tax return to get a first-round stimulus check; or
A federal agency that provides you benefits, such as the Social Security Administration, Department of Veterans Affairs, or the Railroad Retirement Board.
If the IRS doesn’t have your bank account information, it will send you a paper check or debit card by mail.
You can use the IRS’s Child Tax Credit Update Portal to change the bank account information the IRS has on file. If you want to make bank information changes for the September 15 payment, you need to do so by August 30. The online tool will tell you if you’re scheduled to receive monthly payments by direct deposit. If so, it will list the bank routing number and the last four digits of your account number. If you don’t change it, this is the account that will receive all future monthly payments.
If you do want to change the bank account, you can do so by updating the bank routing number and your account number and indicating whether it’s a savings or checking account. Note that monthly payments can’t be split between multiple accounts – the entire payment must go into one bank account.
Families who are currently scheduled to receive payments by mail can also sign up for direct deposit using the Child Tax Credit Update Portal to add their bank account information (again, this must be done by August 30 for the September payment). Just enter your bank routing number and account number and indicate whether it’s for a savings or checking account. You’ll get paid much faster if you switch to direct deposit, plus you won’t have to worry about a paper check or debit card getting lost or stolen.
More Information on the 2021 Child Tax Credit
In addition to increasing the credit amount and authoring monthly advance payments, Congress made other changes to the 2021 child tax credit, too. For example, the age for an eligible child was raised to 17, the credit is fully refundable, and the $2,500 earnings floor was removed. An additional layer of phase-outs was also introduced to prevent wealthier families from claiming a larger credit.
Right now, these enhancements only apply to the 2021 tax year. But, as mentioned earlier, President Biden and others want to extend most of them through 2025. (The credit would be fully refundable on a permanent basis under the president’s plan.) Whether that happens remains to be seen, but it’s certainly possible while Democrats control both houses of Congress and the White House.
We’ll continue to cover any further child tax credit developments, but in the meantime you can get up-to-speed on all the changes for this year’s credit at Child Tax Credit 2021: How Much Will I Get? When Will Monthly Payments Arrive? And Other FAQs.
Whether it’s your only source of income or a side hustle on top of your regular gig, part-time jobs are a great way to make some money while keeping a flexible schedule.
But part-time work comes with some budget complications you may not be aware of. Here are some strategies to consider if you have a part-time job.
Track expenses
If your part-time job includes freelance or gig economy work, you may be eligible to deduct related expenses on your taxes to reduce your overall tax burden.
For example, if you teach Pilates a few nights a week, you may be able to deduct training courses, workout clothes, or equipment. You can also deduct the cost of driving to and from the Pilates studio.
Take time every week to go through your transactions and mark which ones are tax-deductible. If you’re not sure whether or not an item is deductible, contact a tax professional who specializes in your industry. You may have to pay a consulting fee, but there’s a good chance you’ll earn more money back on your taxes.
Save for estimated taxes
If your part-time job doesn’t withhold taxes, you’ll have to pay them yourself. This can come as a huge shock at tax time if you’re not prepared. Freelance workers and non-employees, like gig economy workers, are required to withhold their own taxes.
A basic rule of thumb is to save between 20% and 30% of your untaxed income for taxes. For example, if you complete a $200 freelance graphic design project, set aside between $40 and $60 for taxes. Many freelancers and contractors keep a separate savings account just for taxes, so they don’t accidentally spend the money.
Manage cash carefully
If you work part-time as a waiter or bartender, you may be paid in cash tips. If you want to avoid making frequent trips to a bank or ATM to deposit that money, you can start using the cash envelope budgeting method.
Here’s how it works. Divide your categories into individual envelopes and insert the predetermined amount of cash in each envelope. If you don’t want to carry a huge wad of cash in your wallet or purse, you can budget for a week of expenses instead of a whole month.
If you prefer to shop using a debit or credit card, deposit the cash in your bank account regularly so you don’t accidentally spend it. It’s hard to track cash transactions, so unless you plan to use the envelope method, deposit any cash you earn quickly.
If you only have a part-time job
Review your budget often
If you’re living on a part-time salary, you probably have little margin for error in your budget. The best way to avoid going over is to monitor your spending often. Check in at least once a week and see how your actual spending aligns with your projections.
If you spend more than you’ve allotted, see if you can cut back on a different category. If that’s not possible, try to find a way to pick up more hours at work. Always leave some wiggle room in your budget to account for going over.
Overspending regularly in one particular area can be a sign that you’re not allocating enough money in that category. If this keeps happening, you may have to revise your budget to make more room in that specific category. This may involve eliminating or reducing a fixed expense, like moving to a cheaper apartment, getting an extra roommate or cutting a subscription service.
If you have a full-time and a part-time job
Take advantage of benefits
Many companies offer benefits even if you’re only working part-time. These can include matching retirement contributions, tuition reimbursement, health insurance, stock options and paid time off.
Talk to the HR department and learn how you can take advantage of these benefits. You never know what kind of unusual perks may be included, like a free gym membership or discounts to other businesses.
These benefits may actually be better than what your full-time employer offers. Compare health insurance programs carefully and see which option makes more sense. If you work part-time for a major company, they may have a less expensive health insurance plan than your full-time job – especially if the latter is a small business or nonprofit.
Always utilize an employer’s 401(k) plan if they match employee contributions. Employer contributions are essentially free money, and the rule of thumb is to always contribute enough to receive the free match. You’re allowed to have multiple 401(k) accounts, as long as you don’t exceed the $19,500 annual contribution limit.
Have a reason for working more
Working a part-time job on top of a full-time job can be exhausting, and you’ll get burnt out if you don’t have a specific reason for working so many hours.
It’s not enough to want more money. It has to be something personal and motivating, like “I’m saving so I can take a three-week trip to New Zealand next year,” or “I’m working 60 hours a week so I can save for a down payment.”
Keep the reason top of mind by having pictures of your goal somewhere close, like on your phone’s background, your refrigerator door, or your bathroom mirror. This will serve as a consistent reminder why you’re working so many hours.
Avoid lifestyle creep
When you’re working a part-time and a full-time job, you may be tempted to treat yourself to alleviate the stress. For example, you might order takeout instead of making dinner. Doing this once in a while is fine, but making it a regular habit can negate the whole point of taking on extra hours.
Build in treats as part of your budget and find low-cost ways to relax, like hiking with a friend or hosting a game night at your house. If your part-time job is paid on a project basis, you could allocate a certain percentage for discretionary purchases. For example, you could decide to spend 20% of what you earn and save 80%.
Many people don’t factor in sales taxes when they’re looking at the tax-friendliness of different states. That’s a mistake. Forty-five states plus the District of Columbia impose a sales tax. In addition, local sales tax is collected in 38 states. The combined state and local levy can be hefty, too. In fact, in Tennessee (which took the top spot in our round-up of the 10 States With the Highest Sales Tax), the average combined state and local sales tax is 9.55%, according to the Tax Foundation. That’s a big bite out of your wallet every time you make a purchase.
On the flip side, for states that don’t impose a sales tax — Alaska, Delaware, Montana, New Hampshire and Oregon — residents are often hit hard with other taxes (like income or property taxes). Afterall, money for roads and schools has to come from somewhere. New Hampshire, for example, has some of the highest real estate taxes in the country. In Oregon, income tax rates can be as high as 9.9%, which is the fourth-highest top rate in the nation.
The information below will help you understand more about what you will really pay to live in the five states with no sales tax. For each state, we’ve also included a link to our full guide to state taxes for middle-class families to help you put these shopping destinations in perspective.
Income tax brackets are 2020 values, unless otherwise noted. Property tax values are for 2019, the most recent data available.
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Alaska
Overall Rating for Middle-Class Families: Most tax-friendly
Sales Tax: While the Last Frontier has no state sales tax (or else it wouldn’t be on this list), localities can levy sales taxes, which can go as high as 7.5%. But, according to the Tax Foundation, the statewide average is only 1.76%. That’s the lowest combined average rate for states that impose either state or local sales taxes.
Income Tax Range: No state income tax.
Property Taxes: In Alaska, the median property tax rate is $1,182 per $100,000 of assessed home value, which is above the national average.
For details on other state taxes, see the Alaska State Tax Guide for Middle-Class Families.
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Delaware
Overall Rating for Middle-Class Families: Most tax-friendly
State Sales Tax: Delaware has no state or local sales taxes. It’s interesting to note that, in response, New Jersey halved its sales tax in Salem County, which borders Delaware.
Income Tax Range: Low: 2.2% (on taxable income from $2,001 to $5,000). High: 6.6% (on more than $60,000 of taxable income). The top rate is middle-of-the-road when compared to other states. Wilmington also imposes a city tax on wages.
Property Taxes: For Delaware homeowners, the median property tax rate is $562 per $100,000 of assessed home value — the lowest among the states featured on this list.
For details on other state taxes, see the Delaware State Tax Guide for Middle-Class Families.
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Montana
Overall Rating for Middle-Class Families: Tax-friendly
State Sales Tax: No state sales tax, but some resort destinations such as Big Sky, Red Lodge and West Yellowstone have local sales taxes.
Income Tax Range: Low: 1% (on up to $3,100 of taxable income). High: 6.9% (on more than $18,700 of taxable income).
Starting in 2022, the top rate will be 6.75% on taxable income over $17,400. Then, beginning in 2024, the income tax rates and brackets will be substantially revised (there will only be two rates – 4.7% and 6.5%).
Property Taxes: For homeowners in Montana, the median property tax rate is $831 for every $100,000 of assessed home value.
For details on other state taxes, see the Montana State Tax Guide for Middle-Class Families.
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New Hampshire
Overall Rating for Middle-Class Families: Mixed tax picture
State Sales Tax: None.
Income Tax Range: New Hampshire doesn’t have an income tax. But there’s a 5% tax on dividends and interest in excess of $2,400 for individuals ($4,800 for joint filers).
Property Taxes: The median property tax rate in New Hampshire is $2,050 for every $100,000 of assessed home value.
For details on other state taxes, see the New Hampshire State Tax Guide for Middle-Class Families.
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Oregon
Overall Rating for Middle-Class Families: Not tax-friendly
State Sales Tax: None.
Income Tax Range: Low: 4.75% (on up to $7,200 of taxable income for married joint filers and up to $3,600 for single filers). High: 9.9% (on more than $250,000 of taxable income for married joint filers and more than $125,000 for single filers). Dollar figures for 2020 are not available yet, so 2019 amounts are shown.
A “kicker” tax credit may be available on tax returns for odd-numbered years. The credit is authorized if actual state revenues exceed forecasted revenues by 2% or more over the two-year budget cycle.
Property Taxes: The median property tax rate for Oregon homeowners is $903 per $100,000 of assessed home value.
For details on other state taxes, see the Oregon State Tax Guide for Middle-Class Families.
Chances are you’ve gotten your third stimulus check by now, but you may still be waiting on that other chunk of change the IRS owes you: your tax refund.
The IRS is sitting on a backlog of 29 million returns that require manual processing, which basically means that a human needs to review it.
To be clear, most taxpayers who e-file have their returns processed and receive their refunds within 21 days, according to the IRS. But if you’re still waiting and wondering “where is my tax refund?”, here’s what’s going on and how you can track it.
Why You Haven’t Received Your Tax Refund
The 2020 tax season has been an especially complicated one for IRS staff and accountants.
As of March, the IRS still had a backlog of more than 2 million returns from 2019. Most of them are leftover returns filed by mail that piled up last year when most IRS offices were temporarily shuttered due to COVID-19.
But on top of that, there are a number of complexities created by the three stimulus bills, the most recent of which passed in the middle of tax season. On top of the usual tax season mayhem, the IRS was tasked with delivering the third stimulus check. Plus, tax season started 16 days later than usual this year. These challenges prompted the IRS to extend the tax deadline to May 17.
For example, people who typically qualify for the Earned Income Tax Credit, a credit for low- and middle-income working families, may not have been eligible in 2020 due to expanded unemployment benefits. The $900 billion stimulus package that passed in December changed the rules to allow families to use 2019 income to qualify instead of 2020 income.
However, the IRS didn’t have time to update its programs to reflect this change, so if you’re seeking the Earned Income Tax Credit based on 2019’s income, an IRS employee will need to manually review it.
The same applies if you qualify for stimulus money from the first two checks based on your 2020 return that you didn’t qualify for based on your 2019 or 2018 return. For example, if your 2019 income was higher than your 2020 income, you may qualify for more stimulus money. Or if you had a child in 2020, you’d get stimulus credits on their behalf. These situations also require a manual review.
But your tax refund could also be delayed for all the reasons that would apply in a normal year. For example, if your refund was sent to a bank account that you’ve since closed, the IRS will eventually cut you a paper check, but that adds to the wait time. If someone fraudulently filed a tax return in your name to steal your refund, the IRS will think that you’ve already filed and reject it. Your refund will also be delayed if you made an error or your return was incomplete.
If you owe certain types of debt like child support or back taxes, the IRS could take your refund and use it to offset what you owe.
Paper returns require manual processing, so if you’ve filed by paper, expect a long wait, even if there are no issues with your return. The IRS is urging taxpayers who have yet to submit their returns to file online instead of by mail.
If you made an error that requires an amended return, your tax season will be even more prolonged. The IRS will notify you of the error by mail, and you’ll have to send in Form 1040X. There’s only one way to do this: by mail. Then, your amended return will be added to the 29 million-plus unprocessed returns.
What to Do if You’re Still Waiting
The first step is to make sure the IRS has actually received your return.
You can track your return using the Where’s My Refund feature on the IRS website or the IRS2Go app. You’ll need to provide your Social Security number, filing status and your exact refund amount.
But these tools have limited usefulness. If your return has been processed, they tell you when your refund is scheduled for deposit, but they don’t provide information about why a return is still being processed or whether you need to provide additional information, which prompted recent criticism from the Taxpayer Advocate Service.
If you filed electronically, you should be able to see whether the IRS has accepted your return within 24 hours. If the IRS has accepted your return, that just means it has confirmed it received it. The IRS still has to process it.
If you sent a paper return, you can expect a long wait before you can confirm that the IRS even has your return. Even in normal circumstances, tracking a paper return can take about four weeks.
The IRS says its staff will help you research the status of your refund only if you filed electronically more than three weeks ago or sent it by mail at least six weeks ago, or if Where’s My Refund tells you to get in touch.
Considering that the IRS has only answered about 7% of individual taxpayer phone calls to date, it’s pretty tough to talk to a human. Even if you’re one of the lucky ones who gets through to a human, they probably won’t be able to give you much information. The IRS systems don’t tell employees who handle phone calls why a return required manual processing. But if you want to try, the number for checking the status of a refund is 800-829-1954.
What to Do if You Haven’t Filed Yet
The big takeaway if you haven’t filed yet: Filing electronically is the way to go. There are plenty of easy-to-use tax software options, many of which have free versions.
Not only will you get your refund faster, but you’re also less likely to make errors that could result in further delays because the software is doing the math for you. Additionally, filing electronically is more secure than putting all that personal information in an envelope.
And of course, the sooner you file, the better. It usually takes longer to get your refund as Tax Day approaches, so stop delaying and block off time for a date with your tax software of choice.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to [email protected]
Before you embark on a shopping spree in any of the 10 worst states for sales taxes featured here, you’ll want to make extra room in your budget. Our biggest offender clocks in at 9.55% once both state and local sales taxes are factored in (continue reading our round-up to find out which state is the priciest culprit).
However, retirees and other relocators shouldn’t judge a state by its sales tax alone. While this expense may be costlier in some areas, residents in states with a high sales tax may be able to reap the benefits of other tax-related perks, such as not having to pay state income tax.
Got your attention? Take a look at our list to find out which states will nickel-and-dime you the most on everyday purchases.
Sales tax values are for 2020 and were compiled by the Tax Foundation. Income tax brackets are for the 2020 tax year. Property tax values are for 2019.
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10. New York
Overall Rating for Middle-Class Families: Least tax-friendly
State Sales Tax: 4% state levy. Localities can add as much as 4.875%, and the average combined rate is 8.52%, according to the Tax Foundation. In the New York City metro area, there is an additional 0.375% sales tax to support transit. Clothing and footwear that cost less than $110 (per item or pair) are exempt from sales tax. Groceries and prescription drugs are exempt, too. Motor vehicle sales are taxable, though.
Income Tax Range: Low: 4% (on up to $8,500 of taxable income for single filers and up to $17,150 for married couples filing jointly); High: 8.82% (on taxable income over $1,070,550 for single filers and over $2,155,350 for married couples filing jointly).
Starting in 2021, the top rate is 10.9% on taxable income over $25 million (regardless of filing status).
New York City and Yonkers imposed their own income tax. A commuter tax is also imposed on residents of New York City, as well as on residents of Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester Counties.
Property Taxes: In the Empire State, the median property tax rate is $1,692 per $100,000 of assessed home value.
For details on other state taxes, see the New York State Tax Guide for Middle-Class Families.
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9. California
Overall Rating for Middle-Class Families: Most tax-friendly
State Sales Tax: 7.25% state levy. Localities can add as much as 2.5%, and the average combined rate is 8.68%, according to the Tax Foundation. Groceries and prescription drugs are exempt from these taxes, but clothing and motor vehicles are taxed.
Income Tax Range: Low: 1% (on up to $17,864 of taxable income for married joint filers and up to $8,932 for those filing individually); High: 13.3% (on more than $1,198,024 for married joint filers and $1 million for those filing individually).
Property Taxes: If you’re planning to buy a home in the Golden State, the median property tax rate is $729 per $100,000 of assessed home value.
For details on other state taxes, see the California State Tax Guide for Middle-Class Families.
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8. Kansas
Overall Rating for Middle-Class Families: Least tax-friendly
State Sales Tax: 6.5% state levy. Localities can add as much as 4%, and the average combined rate is 8.69%, according to the Tax Foundation. These rates also apply to groceries, motor vehicles, clothing and prescription drugs.
Income Tax Range: Low: 3.1% (on $2,501 to $15,000 of taxable income for single filers and $5,001 to $30,000 for joint filers); High: 5.7% (on more than $30,000 of taxable income for single filers and more than $60,000 for joint filers).
Property Taxes: Kansans who own their homes pay a median property tax rate of $1,369 per $100,000 of assessed home value.
For details on other state taxes, see the Kansas State Tax Guide for Middle-Class Families.
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7. Illinois
Overall Rating for Middle-Class Families: Least tax-friendly
State Sales Tax: 6.25% state levy. Localities can add as much as 4.75%, and the average combined rate is 8.82%, according to the Tax Foundation. Food and prescription drugs are taxed at only 1% by the state. Clothing and motor vehicles are fully taxed.
Income Tax Range: There is a flat rate of 4.95% of federal adjusted gross income after modifications.
Property Taxes: For homeowners in Illinois, the median property tax rate is $2,165 per $100,000 of assessed home value — the second highest in our round-up.
For details on other state taxes, see the Illinois State Tax Guide for Middle-Class Families.
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6. Oklahoma
Overall Rating for Middle-Class Families: Not tax-friendly
State Sales Tax: 4.5% state levy. Localities can add as much as 7%, and the average combined rate is 8.95%, according to the Tax Foundation. Prescription drugs are exempt and motor vehicles are taxed at a rate of 1.25% (a 3.25% excise tax also applies). Grocery items and clothing are taxable at 4.5%, plus local taxes.
Income Tax Range: Low: 0.5% (on up to $1,000 of taxable income for single filers and up to $2,000 for married joint filers); High: 5% (on taxable income over $7,200 for single filers and over $12,200 for married joint filers).
Property Taxes: For Oklahomans who own a home, the median property tax rate is $869 per $100,000 of assessed home value.
For details on other state taxes, see the Oklahoma State Tax Guide for Middle-Class Families.
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5. Alabama
Overall Rating for Middle-Class Families: Tax-friendly
State Sales Tax: 4% state levy. Localities can add as much as 7.5% to that, and the average combined rate is 9.22%, according to the Tax Foundation. Prescription drugs are exempt. Groceries and clothing are fully taxable, while motor vehicles are taxed at a reduced rate of 2% (additional local taxes may apply).
Income Tax Range: Low: 2% (on up to $1,000 of taxable income for married joint filers and up to $500 for all others); High: 5% (on more than $6,000 of taxable income for married joint filers and more than $3,000 for all others).
Some Alabama municipalities also impose occupational taxes on salaries and wages.
Property Taxes: In Alabama, the median property tax rate is $395 per $100,000 of assessed home value — the lowest on our list.
For details on other state taxes, see the Alabama State Tax Guide for Middle-Class Families.
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4. Washington
Overall Rating for Middle-Class Families: Most tax-friendly
State Sales Tax: 6.5% state levy. Municipalities can add up to 4% to that, with the average combined rate at 9.23%, according to the Tax Foundation. Grocery items and prescription drugs are exempt. Clothing is taxable, as are motor vehicles. However, there’s an additional 0.3% tax on sales of motor vehicles.
Income Tax Range: Washington has no state income tax.
Property Taxes: Home buyers in the Evergreen State can expect to pay a median property tax rate of $929 per $100,000 of assessed home value.
For details on other state taxes, see the Washington State Tax Guide for Middle-Class Families.
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3. Arkansas
Overall Rating for Middle-Class Families: Mixed tax picture
State Sales Tax: 6.5% state levy. Localities can add as much as 5.125%, and the average combined rate is 9.51%, according to the Tax Foundation. Prescription drugs are exempt. Grocery items are taxed at 0.125% (additional local taxes may apply). Motor vehicles are taxed if the purchase price is $4,000 or more (7% tax rate in Texarkana). However, starting in 2022, the rate on sales of used motor vehicles priced between $4,000 and $10,000 will only be 3.5%. Clothing is taxed at the standard rate.
Income Tax Range: Low: 2% (on taxable income from $4,500 to $8,899 for taxpayers with net income less than $22,200), 0.75% (on first $4,499 of taxable income for taxpayers with net income from $22,200 to $79,300), or 2% (on on first $4,000 of taxable income for taxpayers with net income over $79,300); High: 3.4% (on taxable income from $13,400 to $22,199 for taxpayers with net income less than $22,200), 5.9% (on taxable income from $37,200 to $79,300 for taxpayers with net income from $22,200 to $79,300), or 6.6% (on taxable income over $79,300 for taxpayers with net income over $79,300). Beginning in 2021, the top rate for taxpayers with net income over $79,300 will be 5.9% (on taxable income over $8,000).
A “bracket adjustment” of between $40 and $440 is subtracted from the amount of tax due for taxpayers with net income from $79,301 to $84,600.
Property Taxes: For homeowners in the Natural State, the median property tax rate is $612 per $100,000 of assessed home value.
For details on other state taxes, see the Arkansas State Tax Guide for Middle-Class Families.
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2. Louisiana
Overall Rating for Middle-Class Families: Tax-friendly
State Sales Tax: 4.45% state levy. Localities can add as much as 7%, and the average combined rate is 9.52%, according to the Tax Foundation. Groceries and prescription drugs are exempt from the state’s sales tax, but localities may tax these. Clothing and motor vehicles are taxable.
Income Tax Range: Low: 2% (on $12,500 or less of taxable income for individuals, $25,000 for joint filers); High: 6% (on more than $50,000 of taxable income, $100,000 for joint filers).
Property Taxes: The median property tax rate in Louisiana is $534 per $100,000 of assessed home value.
For details on other state taxes, see the Louisiana State Tax Guide for Middle-Class Families.
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1. Tennessee
Overall Rating for Middle-Class Families: Most tax-friendly
State Sales Tax: 7% state levy. There’s also an additional state tax of 2.75% on sales of single items that applies to the portion of the sales price from $1,600 to $3,200. Localities can add up to 2.75%, with an average combined rate of 9.55%, according to the Tax Foundation. Groceries are taxed at 4% by the state, in addition to any additional local taxes. Clothing is taxed at the standard rate. Motor vehicles are taxed at the basic 7% rate, plus the additional 2.75% on purchases between $1,600 and $3,200. There’s no tax on prescription drugs.
Income Tax Range: There’s no state income tax in Tennessee. However, dividends and some interest are subject to the Hall Tax at a 1% rate in 2020. The first $1,250 in taxable income for individuals ($2,500 for joint filers) is exempt. 2020 is the last year for this tax, which is being phased out. Also, the tax is waived if you’re over the age of 100.
Property Taxes: In Tennessee, the median property tax rate is $636 per $100,000 of assessed home value.
For details on other state taxes, see the Tennessee State Tax Guide for Middle-Class Families.
Road trips are fun until you have to stop and get gas. Fortunately for drivers, the federal government’s gas tax hasn’t budged from 18.4 cents per gallon since 1993. However, states and the District of Columbia levy their own gas taxes.
And thanks to the pandemic, folks have been using their cars a lot more since public transportation and flying are viewed as hot-spots for COVID-19. But if you’re traveling cross-country, filling up in certain states can cost you more than others. Here are the 10 states with the highest gas taxes, including a look at how the states do on other big tax metrics, such as sales tax. (A reminder, though: U.S. gas taxes are still among the world’s lowest.)
Gas and diesel prices are from the American Petroleum Institute. Sales taxes are from the Tax Foundation and, when listed as “average,” represent a population-weighted value meant to capture local option taxes. Tobacco and vapor taxes are from the Campaign for Tobacco-Free Kids as well as individual state tax websites.
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Indiana
State Fuel Tax: 42.16¢ per gallon of gasoline, 52¢ per gallon of diesel
State Sales Tax: 7% state levy. No local taxes.
Tobacco Taxes:
Cigarettes: $1 per pack
Snuff: $0.40 per ounce
Other tobacco products: 24% of wholesale price
Vapor products: Starting July 1, 2022, 15% of gross retail income
For details on other state taxes, see the Indiana State Tax Guide for Middle-Class Families.
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Florida
State Fuel Tax: 42.46¢ per gallon of gasoline, 35.27¢ per gallon of diesel (both gasoline and diesel taxes will increase by 0.3¢ per gallon in 2021)
Average Sales Tax: 6% state levy. Localities can add as much as 2.5%, and the average combined rate is 7.08%, according to the Tax Foundation.
Tobacco Taxes:
Cigarettes: $1.34 a pack
Cigars: no tax
All other tobacco products: 85% of the wholesale price
For details on other state taxes, see the Florida State Tax Guide for Middle-Class Families.
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New York
State Fuel Tax: 42.7¢ per gallon of gasoline, 43.43¢ per gallon of diesel
Average Sales Tax: 4% state levy. Localities can add as much as 4.875%, and the average combined rate is 8.52%, according to the Tax Foundation. In the New York City metro area, there is an additional 0.375% sales tax to support transit.
Tobacco Taxes:
Cigarettes and little cigars: $4.35 per pack (in New York City, an extra $1.50 per pack)
Snuff: $2 per container one ounce or less, $2 per ounce for larger containers
Cigars and other tobacco products: 75% of the wholesale price
Vapor products: 20% of retail price
For details on other state taxes, see the New York State Tax Guide for Middle-Class Families.
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Hawaii
State Fuel Tax: 46.84¢ per gallon of gasoline, 49.55¢ per gallon of diesel
Average Sales Tax: 4% state levy. Localities can add as much as 0.5%, but the average combined rate is only 4.44%, according to the Tax Foundation.
Tobacco Taxes:
Cigarettes and little cigars: $3.20 per pack
Large cigars: 50% of the wholesale price
Other tobacco products: 70% of the wholesale price
For details on other state taxes, see the Hawaii State Tax Guide for Middle-Class Families.
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Washington
State Fuel Tax: 49.4¢ per gallon of gasoline, 49.4¢ per gallon of diesel
Average Sales Tax: 6.5% state levy. Municipalities can add up to 4% to that, with the average combined rate at 9.23%, according to the Tax Foundation.
Tobacco Taxes:
Cigarettes and little cigars: $3.03 per pack
Cigars: 95% of sale price, with a cap of $0.75 per cigar
Moist snuff: $2.53 per 1.2-ounce container
Other tobacco products: 95% of sale price
Vapor products: Closed products, $0.27 per ml. Open containers greater than 5 ml, $0.09 per ml
For details on other state taxes, see the Washington State Tax Guide for Middle-Class Families.
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Nevada
State Fuel Tax: 50.48¢ per gallon of gasoline, 28.56¢ per gallon of diesel
State Sales Tax: 6.85% state levy. Localities can add as much as 1.53%, and the average combined rate is 8.23%, according to the Tax Foundation.
Tobacco Taxes:
Cigarettes: $1.80 per pack
Other tobacco products: 30% of wholesale price
Vapor products: 30% of wholesale price
For details on other state taxes, see the Nevada State Tax Guide for Middle-Class Families.
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New Jersey
State Fuel Tax: 50.7¢ per gallon of gasoline, 57.7¢ per gallon of diesel
State Sales Tax: 6.625% state levy. That rate is cut in half (3.3125%) for in-person sales in designated Urban Enterprise Zones located in disadvantaged areas. Salem County, which borders no-tax Delaware, also charges the reduced 3.3125% rate.
Tobacco Taxes:
Cigarettes: $2.70 per pack
Moist snuff: $0.75 per ounce
Other tobacco products: 30% of the wholesale price
Vapor products: $0.10 per ml for closed containers. Bulk nicotine liquid is taxed at 10% of retail price.
For details on other state taxes, see the New Jersey State Tax Guide for Middle-Class Families.
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Illinois
State Fuel Tax: 52.16¢ per gallon of gasoline, 59.98¢ per gallon of diesel
Average Sales Tax: 6.25% state levy. Localities can add as much as 4.75%, and the average combined rate is 8.82%, according to the Tax Foundation.
Tobacco Taxes:
Cigarettes and little cigars: $2.98 per pack, Cook County has an additional tax of $3. Three localities, all in Cook County, add to that. According to the Campaign for Tobacco Free Kids, a pack purchased in Chicago has the highest total tax in the country: $7.16.
Snuff: $0.30 per ounce
Other tobacco products: 36% of the wholesale price
Vapor products: 15% of wholesale price; localities have additional taxes
For details on other state taxes, see the Illinois State Tax Guide for Middle-Class Families.
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Pennsylvania
State Fuel Tax: 58.7¢ per gallon of gasoline, 75.2¢ per gallon of diesel
Average Sales Tax: 6% state levy. Philadelphia has a local sales tax of an additional 2%, and Allegheny County (Pittsburgh’s home county) adds a local sales tax of 1%, and the combined rate is 6.34%, according to the Tax Foundation.
Tobacco Taxes:
Cigarettes and little cigars: $2.60 per pack. The City of Philadelphia levies an additional $2 local tax per pack of cigarettes
Other tobacco products: 55 cents per ounce. Additional taxes due in Philadelphia.
Vapor products: 40% of wholesale price
For details on other state taxes, see the Pennsylvania State Tax Guide for Middle-Class Families.
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California
State Fuel Tax: 63.05¢ per gallon of gasoline (63.65¢ effective July 1, 2021), 83.06¢ per gallon of diesel (83.46¢ effective July 1, 2021)
Average Sales Tax: 7.25% state levy. Localities can add as much as 2.5%, and the average combined rate is 8.68%, according to the Tax Foundation.
Tobacco Taxes:
Cigarettes: $2.87 per pack
All other tobacco products: 56.93% of manufacturer’s price
Vapor products: $0.05 per ml of consumable product
For details on other state taxes, see the California State Tax Guide for Middle-Class Families.
