The Tax Foundation released its annual report on wireless taxes on September 28: Federal Surcharge Drives Another Increase in Wireless Taxes and Fees in 2026. Nationally, it found a record high for taxes on wireless services in 2026: 28.8% of monthly wireless cell phone bills go to taxes.
The national increase in 2026 from the previous year was driven in large part by an increase in the federal Universal Service Fund “contribution fee” (essentially a tax) and, in smaller part, driven by a small increase in state and local taxes. Federal USF taxes on wireless revenue that are passed on to consumers now make up 14.39% of monthly wireless bills in each state, up from 13.26% in 2025. On average, state and local taxes make up another 14.42%, up from 14.25% in 2025.
In 2026, Maryland ranks as the 10th highest-taxed state for wireless services. That means Marylanders pay more in wireless taxes than residents of 40 other states and the District of Columbia. Specifically, 31.98% – nearly one third – of a typical Marylander’s monthly wireless bill goes to taxes, compared with the national average of about 29%. (The Tax Foundation calculates these figures as estimates for typical wireless customers; individuals’ actual effective rates vary by factors like plan type and number of lines.)
Unfortunately, the rising federal and state taxes mean that consumers can’t fully capture savings from the steady decline in wireless prices over the last couple of decades. CTIA, the wireless industry association, reported in April that “prices for unlimited service plans declined by more than 10% last year alone and are down 35% over the last five years,” even as network quality and speeds improve. Meanwhile, taxes climbed from 16.2% to 28.8% of a monthly bill over the past two decades, according to the Tax Foundation report.
Making matters worse, much of what wireless consumers pay in effective taxes is poorly spent or misallocated. Federal and state taxes raise the cost of wireless service, which reduces consumer demand and discourages infrastructure investment. On the federal side, the taxes fund the outdated and inefficient Universal Service Fund. Congress created the program to expand telecommunications access, but the marketplace has changed dramatically since the program’s origins in 1996. The result is a structure that produces messy and backwards industrial policy. (Read more here and here.) Many states also have their own telecom subsidy programs.
Federal and state governments should stop extracting so much money from wireless consumers, especially since these taxes hit low-income households hardest. Rather than taxing wireless to fund government-run subsidy systems, Congress – and states with similar programs – should allow wireless and other telecom service providers to decide how best to invest in their networks and serve their customers.
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