Definition of Excise Tax | Tax Included in the Price of Certain Items

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Excise Tax Definition

Short Definition

Excise tax is a tax placed on the manufacture, sale or use of certain goods and services. It can be imposed by both federal and state governments.

Expanded Definition

Excise tax is included in the price of an item, instead of being tacked on like sales tax. These taxes are often added onto items that are viewed as nonessential or harmful, which helps decrease their sale. They are also known as “sin taxes” because they are commonly imposed on the sale of tobacco products, alcohol and gambling. Other items that have excise tax added to them are fuel, indoor tanning services, coal production, and air transportation.

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