Why car rental bills are so high: Taxes and sneaky fees
If you’re renting a car in Las Vegas any time soon, be warned: The base rate might seem low, but taxes and fees may add a significant amount to your bill.
This warning comes from the rental car comparison site Autoslash.com, which did a state-by-state comparison earlier this year and concluded that Nevada had the highest rental car fees and taxes in the country. (Las Vegas, of course, is the rental car capital of the state.)
The priciest states for rental car fees in the Autoslash list were east of the Rocky Mountains.
But once you start comparing cities and states, it’s quickly clear that anywhere you rent a car, your bill deserves scrutiny.
Throughout the U.S., rental car prices rise and fall dramatically by the season and sometimes by the day.
“It’s important that you recheck the rate,” said Jonathan Weinberg, chief executive of Autoslash. “Just because you have the best rate today doesn’t mean you’ll have the best rate next week or next month.”
Also, no matter where you’re headed, the rental car company is likely to pitch you hard on insurance, toll coverage, prepaid refueling and other cost-boosting options. (That’s another conversation.)
Almost anywhere you go, you can count on a medley of local and state taxes and airport and other fees that many consumers think are levies by some government agency.
Many of those costs are government taxes. Legislators know it’s easier to extract money from visitors (who often rent cars) than from their constituents. And those taxes “are getting higher,” Weinberg said. “It’s basically a money grab by the municipalities.”
Every state, every city and every rental car company has its own way of labeling the dollars it extracts from consumers.
Some states, like Colorado, have sales tax and separate rental-car taxes.
Then there’s Alaska, which charges no sales tax but hits rental-car customers with a 10% surcharge.
Meanwhile, Oregon has neither sales nor rental car taxes. But that doesn’t mean your Portland trip next year will be a bargain bonanza. Multnomah County, which includes Portland, has a 17% rental car tax.
For anyone who wants to see which states have the highest taxes that specifically target rental car customers, the National Conference of State Legislators has been keeping track. Alaska, Nevada, Arkansas, the District of Columbia, Maryland, Texas and Virginia are at the top of the list, all assessing 10% to 11.5%.
Once those state taxes get combined with city levies and other fees, the results can be daunting. Which brings us back to Nevada.
Autoslash’s tally of Nevada fees includes a 10% rental-car surcharge and a statewide sales tax of at least 6.85%. The study also noted an extra 2% levied by Clark and Washoe counties (which include Las Vegas and Reno, respectively). In Clark County there’s also 1.4% in sales taxes that Autoslash didn’t delve into.
If you rent a car for a base price of $100 in Las Vegas, expect $20.25 or more on your bill.
Among other states with the highest combined taxes and fees:
Minnesota: Taxes and fees add up to more than 18% (9.2% statewide rental car surcharge, 6.875% in state sales tax and local taxes that can add up to 2%).
Arkansas: Taxes and fees amount to 16.5% (6.5% sales tax and 10% rental car surcharge).
District of Columbia: Taxes and fees add up to 16% (5.75% sales tax and 10.25% rental car surcharge).
And then there are those fees
But there’s more to worry about than just government taxes and surcharges. Many rental car companies come up with their own added “fee” categories to defray operational expenses rather than just including those costs in their advertised rates. It makes their base prices look lower. (It’s a cousin of the hotel resort fee, now the subject of lawsuits against Hilton and Marriott.)
For a closer look at how that can work — and how costly and confusing it can be — let’s go to Denver International Airport.
There, the city and state sales taxes add up to 8.31%. When I consulted Avis for a detailed price quote, the website and a reservationist gave me these numbers: 13.25% in taxes, joined by the following array of fees and charges, including an 11.1% concession recovery fee, a vehicle license fee of 38 cents a day, a customer facility charge of $2.15 a day and a Colorado road safety fee of $2 a day.
Autoslash’s Weinberg calls these categories “sleight of hand” by the rental car companies. The concession recovery fee is basically to cover the company’s rent at the airport, he said, adding that when you see an “energy recovery” fee, that’s probably the utility bill.
They add up. If you rent a car in Denver for four days at a base price of $75 a day, your $300 becomes $401.12.
A salve plus savings
There is, however, a sour sort of consolation for Californians renting cars out of state: Every other state has substantially lower gas prices than California, so your service station stops will feel like a bargain.
This is because California assesses more taxes — 56 cents per gallon — and because of supply and demand. On Monday, AAA reported California’s average regular gas price at $4.06 gallon, followed by Hawaii ($3.66) and Nevada ($3.39). The rest of the country was spread between $2.24 (Louisiana) and $3.43 (Washington state).
Here are a few ways to keep your rental car bill down:
• Rent the smallest car you can get away with and don’t let the agent upsell you into a larger vehicle or more insurance than you need.
• Use off-airport companies when you can. That way, you escape airport concession fees.
• Think hard about ride-share, taxi and public transit options, especially if you’re headed to a big city where parking is expensive.
• Book your rental car as part of a package with your airfare or hotel. (I recently did that through Expedia on a Baja California trip and wound up paying a base rate of $8 a day for a Nissan Sentra from Enterprise.)
• Look for coupon codes for rental car companies. (Google “coupon codes” and “rental cars.”)
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