If you're planning to rent a car in New York, you probably will expect to pay the New York state sales tax that will appear on your bill; however, you may not be aware of the car rental tax that will be added as well. This tax was approved under the assumption that it would mostly affect tourists and not New York state residents. The statistics show a different picture: it is largely residents who are renting cars in New York. Still, whether you are planning a trip to 'the Big Apple' from another state, or whether you live in New York and just need a car for a few days, you must be prepared to pay the tax. Currently, the car rental tax is calculated at 11% of your total bill.
In the past, the car rental tax in New York was not quite as high as it is today. It began as 5% of the total rental bill and has jumped to 11% as of June 2009. When this is added to the already high sales tax of 8.375%, one can imagine how it will impact the wallets of car renters in the state of New York.
Though it may seem like the state of New York is excessively adding taxes, it is not the only state that imposes a car rental tax. In Arkansas, a 10% car rental tax was imposed to help pay the salaries of public school teachers. Dallas car renters can expect to see a 5% rental tax on their bills, which will contribute to the funding of the American Airlines basketball arena. Las Vegas imposed a 2% rental tax to help fund a new performing arts center.
With New York having one of the highest rental taxes in the country, you may be wondering where the funds are going. Unfortunately, the answer in this case is not as simple as it is with other states. New York is experiencing significant shortfalls in its budgeting. The car rental tax is one part of the state's attempt to fund various projects. It may seem unfair that the car rental industry has to bear such a high burden, but sadly, they have no recourse. There is no organization in place to challenge car rental taxes, which will certainly have an impact on the car rental business.
Unfortunately, as we continue to hear about states that are experiencing shortfalls in budgeting, we can expect that the car rental tax will not be reduced or eliminated anytime soon. As a renter, the only way to avoid paying this tax is if you are able to present a valid tax exemption form.