Taxes on cell phones are higher than nearly all other goods, but, according to the Tax Foundation, Montanans pay the fourth lowest cell phone tax rates in the country. Tax Foundation spokesman Joe Henchman explains the new study.

"The results were very surprising," Henchman said. "The average tax rate for your average American is  17 percent, that's the combined local, state, and federal taxes on cell phone service, which is twice what people pay on all other purchase for regular sales tax. Montana was one of the lowest in our study at only six percent, but of course, Montana doesn't have a sales tax."

Idaho’s taxes were even lower and Oregon had the lowest cell phone taxes in the country. Henchman says the proximity of these states with low taxes is no accident.

"The importance of competition on keeping tax rates reasonable and similar to your neighbor is certainly undeniable," Henchman said. "All of the states in the inter-mountain west kind of keep each other in check. If you get too far out of line, people will start asking questions."

At a whopping 35 percent, cellphone taxes in the city of Chicago were the highest anywhere in the country. Washington was an outlier in the Northwest with taxes three times higher than Montana’s.


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