What does internet service really cost, once you count the income behind it?How much does internet service really cost, once you add the income tax behind it?
Example price
$70
Example all in
$70
nothing added on top
Example earn first
$100
Single filer on $75,000 in Harris County, Texas. Your calculator below uses your settings.
A federal law bans sales tax on internet almost everywhere — a rare truly tax-free bill.
Federal law bans state sales tax on internet access almost everywhere — a rare case where the exemption is the rule, not the exception.
A federal law stops states taxing your internet bill, and it now covers all of them. There used to be an exception. A few states were taxing internet before the law arrived, and they were allowed to carry on for a while. That permission ran out, so the tax went with it. Getting internet access itself is one of the few things in this country nobody can add sales tax to.
The Internet Tax Freedom Act permanently bans state and local sales tax on internet access, and it is one of the few exemptions on this site with no state-by-state asterisk at all. It did have one: seven states that taxed access before the law existed were allowed to carry on, and that clause was written with an end date rather than left open. The date passed, and with it the last place in the country where a line for internet access could appear on a tax bill. Almost every other exemption here is a majority rather than a rule, which is what makes this one worth stating plainly.
- There is no sales tax on internet access anywhere in the country. That is federal law, and the last exceptions to it have ended.No sales tax applies, in every state. The federal ban on taxing internet access is permanent and the grandfather clause that once exempted a handful of states has expired.
The Internet Tax Freedom Act bars state and local sales tax on internet access nationwide, and since the grandfather clause expired the ban reaches every state without exception — so $0 is the whole answer here rather than a majority case. What the ban does NOT cover is everything else on the bill: equipment rental, installation, and the video or phone half of a bundle are ordinary taxable services in most states, and this figure prices internet access alone.
The income tax in this figure is still computed from Texas and your filing status.
to cover internet service
- Income tax (federal, FICA, state)30%$30
- Internet service70%$70
- Income tax (federal, FICA, state)
- Internet service
Data for nerds — sources, confidence and assumptions
Data for nerdssources, confidence, assumptions
Where each number comes from
| Component | Amount | Confidence |
|---|---|---|
| Item price | $70.00 | Your figureHigh confidence. You supplied this, so it is exact by definition. |
| Income tax to earn it | $29.50 | StatutoryHigh confidence. This number is the law — federal, FICA and state tax rates are published rates, so the only real risk is staleness. |
Jurisdiction applied
- State:
TX - Local income tax: none selected
Assumptions
- There is no sales tax on internet access anywhere in the country. That is federal law, and the last exceptions to it have ended.
- No sales tax applies, in every state. The federal ban on taxing internet access is permanent and the grandfather clause that once exempted a handful of states has expired.
Sources
What this commitment adds up to
$11,940 over 10 yrsInternet service, every month — $1,194 of income every year, and 33 hrs of your life.
Year by year
| Year | Spent | Invested instead |
|---|---|---|
| 1 | $840 | $840 |
| 2 | $1,680 | $1,739 |
| 3 | $2,520 | $2,701 |
| 4 | $3,360 | $3,730 |
| 5 | $4,200 | $4,831 |
| 6 | $5,040 | $6,009 |
| 7 | $5,880 | $7,269 |
| 8 | $6,720 | $8,618 |
| 9 | $7,560 | $10,062 |
| 10 | $8,400 | $11,606 |
Prices and wages are held at today's levels, and the return above is inflation-adjusted to match — consistent by design. The invested-instead line assumes the cash is contributed at the end of each year and left alone; it is an alternative use of the same money, never an extra cost on top.
Your position in the tax system
29.65% on the next dollarEvery extra dollar you earn is taxed at your marginal rate, not your average one — which is why a purchase costs more to fund than a paycheck stub suggests.
Marginal rates are read in gross-income terms: below the standard deduction an extra dollar of pay adds nothing to taxable income, so the true rate there is 0%, not the lowest bracket's. Excludes pre-tax deductions (401(k), HSA), which would lower all three.
Same purchase, different state
TX is #7 of 51The purchase inputs and income stay the same. Your row uses your calculator settings; other states use example counties and omit local income tax. Spread across all 51: $14, from Alaska to Oregon.
- $100
- Texasyou$100
- $114
Choose a state name to compare against somewhere else.
Where every dollar goes
30% never reaches youThe $99.50 you must earn, followed to where it lands. Select a band to isolate it.
- Federal income tax$21.89
- FICA (Social Security + Medicare)$7.61
- Internet service$70.00
Each tax layer is the extra tax this purchase causes — that layer's tax at your income subtracted from its tax at your income plus the gross-up — so bracket boundaries the purchase straddles are handled correctly rather than smoothed over with an average rate.
Is a raise actually a raise?
you keep 70%A raise arrives on top of everything you already earn, so it is taxed at your marginal rate — not the average rate on your whole salary.
Federal, FICA, state and any local income tax — no pre-tax deductions, benefit changes, or payroll withholding quirks, all of which move the real figure. Moving into a higher bracket never taxes the income below the threshold: only the dollars above it pay the higher rate.
Keep going
What you must earn to buy it
A $75,000 Texas salary
| Sticker price | $70.00 |
|---|---|
| Out of pocket | $70.00 |
| Income tax on earning it | $29.50 |
| Hours of work | 2.8 hr |
29.65% of that pay never reaches the purchase.
If the money stayed put
A $75,000 Texas salary
| Spent today | $70 |
|---|---|
| Growth given up | $55 |
| Pay needed to buy it | $100 |
Assumes a 6% annual return that you can edit.
A year of that habit
A $75,000 Texas salary
| Spent a year | $18,200 |
|---|---|
| You must earn | $25,871 |
| Times a year | 260 |
Work hours include time spent earning the tax.
What it adds up to
A $75,000 Texas salary
| Cash paid | $8,400 |
|---|---|
| Hours of work | 1.9 work months |
| A year | $840 |
| Growth given up | $2,672 |
Today’s price held constant; no price rises assumed.
Questions people ask
Why does a small regular cost need such a big salary behind it?
The money leaves after tax but has to be earned before it. Repeat that on a monthly cycle and the gap compounds — the salary needed grows faster than the cost itself.
Is the tax on this the same wherever I am?
For this one, broadly yes. The tax that applies here is set federally or is absent everywhere, so it does not move between states — which is why this page shows one figure rather than fifty-one. Your own income tax still depends on where you live.
What does this figure leave out?
Enough to be worth saying out loud. The limits are listed on this page, because a figure that hides its own edges is more misleading than one that admits them.
Why does a recurring outlay require disproportionate gross income?
Consumption is funded from post-tax income, so required gross income is the outlay divided by one minus the marginal rate on the relevant income slice. For a recurring cost that grossed-up figure recurs at the same cadence, which is why annualised gross requirement exceeds the nominal annual outlay by the full marginal wedge.
Why is this purchase modeled nationally rather than per state?
This category's spend-side treatment is uniform nationally: either the levy is federal, or no state imposes a general sales tax on it. A single national figure is therefore accurate rather than a simplification. Earn-side liability remains state-dependent and is computed separately.
What are the stated limits of this category's model?
Modeling limits for this category are stated explicitly on the page rather than inferred. They typically concern classification edge cases, per-item caps, or local levies outside the modeled base. Where a limit applies to a reader's specific purchase, the figure should be treated as a lower or upper bound as the note describes.