In some states, your Amazon toilet paper order or your DoorDashed fried rice may have gotten a little pricier. And the hope is that you won’t notice. While consumers are used to companies tacking on sneaky fees, the newest generation of bill increases are coming from government taxation, generally local or state.
For instance, in recent years, Minnesota and Colorado have implemented fees on all deliveries. In Colorado, the fee is 28 cents, and in Minnesota, it is 50 cents on orders over $100. Some derisively refer to these fees as “doorstep taxes.”
Other states – some solidly red, others deep blue – are studying doing the same.
These states include Nebraska, Ohio, Hawaii, Maryland, Mississippi, Nevada, New York, and Washington, which are evaluating proposals that would impose fees ranging from 25-75 cents per transaction. Colorado’s fee – which has survived repeal attempts – is expected to generate $5 billion in revenue over the next decade.
Hidden service, security, “convenience,” and other charges are increasingly common and will only become more so, according to Mariano Torras, chair and professor of finance at Adelphi University’s Robert B. Willumstad School of Business. He argues it is occurring as “our once productive economy transitions into a rentier economy in which monopolistic companies extract money from consumers, well, because they can.”
But what surprises him is the move by state and local governments to do the same, “which bucks the recent trend,” Torras said.
“Minnesota and Colorado are getting in on the action, signifying that even corporate monopolists do not have a monopoly on rent extraction,” he said.
For the consumer, he added, what is most important to understand is that the “sneaky fee” is just an additional, albeit disguised tax that the government is charging.
Other tax experts are not surprised, saying this represents low-hanging fruit for cash-strapped state budgets.
“If you are a legislator, you’ve learned that the easiest way to fund the government is through a sales tax or through fees,” said Mike Bernard, chief tax officer at tax technology company Vertex.
Bernard says that people consistently balk at higher property taxes, and income taxes are very variable, so that leaves one primary legislative lever left to pull: a fee or tax. But legislators also see the broad societal shift towards a delivery economy and feel it’s a legitimate tool to use.
“From a policy standpoint, states feel like if a person is not going to get into their car and drive to the store and pay sales tax on gas, if that person doesn’t do that and the UPS truck does it instead, we still need the money to pay for the infrastructure,” Bernard said.
Other fees increasingly imposed by governments include recycling fees for electronic goods.
“Most jurisdictions will charge you a fee because at some point you will try to recycle your cell phone,” Bernard said, leaving an electronic morass to dispose of, “and it’s easier to collect the fee upfront.”
Municipalities have the authority to impose fees and other charges from numerous state statutes authorizing them to perform specific regulatory functions or provide specific public services and improvements, such as roads, parks or emergency services like 911.
‘Neighborhood fees’ on rise too, often at airports
Port authorities are also increasingly levying charges on products bought at the airport. Airport concessions have long been subject to sticker shock, so the newest fees are an extension of that.
“You might go to Starbucks at the airport and find that airport authorities are charging an extra quarter,” Bernard said, adding that in industry parlance that is known as a “neighborhood fee.”
“You are in their neighborhood so they will extract an extra fee,” Bernard says.
Philadelphia International Airport, for instance, began adding a 3% surcharge on all concessions last year.
In 2019, when Bernard started at Vertex — which tracks these types of fees —there were 400 such fees imposed by various entities throughout the U.S. Today, there are 1,400 and the company expects the number will continue to rise.
“People will not be pushing back and the states know that,” Bernard says, noting that the average person just wants their stuff fast and quibbling about an extra charge isn’t worth it and, in many cases, people don’t even notice it unless they study their receipt.
But some experts view these infrastructure elixirs as bad fiscal medicine.
“Stealth taxes like retail delivery fees are a short-term patch, not a long-term solution,” said Arjun Mahadevan, CEO of tax preparation firm Doola. “While they may help states close budget gaps, they also add friction and erode consumer trust.”
For entrepreneurs and small businesses especially, these hidden fees create uncertainty in pricing and customer experience.
“As consumers get more accustomed to fees in other industries, states may continue down this path, but it risks disproportionately impacting the very businesses driving innovation and growth,” Mahadevan said.
Big tech is pushing back
Amazon, DoorDash, Alphabet, Grubhub, and Instacart are among 34 corporate partners in the Chamber of Progress, a tech industry policy coalition opposing the push towards doorstep taxes. Hope Ledford, director of civic innovation policy at the Chamber, says the taxes are regressive and that states have other ways to raise revenue.
“When we first saw delivery taxes, it was clear who got hurt the most: families living paycheck to paycheck. A lot of families do rely on delivery, and these families are already working with thin margins,” Ledford said. “We see these taxes make life more expensive … we see it as an essential service.”
She said many elderly or infirm residents rely on delivery services for medicine or food if they live in a food desert.
Despite these concerns, research shows that higher-income consumers, and younger consumers, are more likely to shop online, doing it for convenience. Research from Capital One shows that households that make $50,000 or less make up the smallest share of online shoppers.
But the tech trade group spokeswoman made another point: “Delivery taxes are not a real fix and they are ineffective, a Band-Aid on the state’s wounded budget. They don’t come close to solving the problems they are trying to address,” she said.
Lawmakers, however, view the fees as a hedge against a continual conversion to EVs and the decline in gas taxes that have helped to fund big projects, as well a a way to tame an increasingly sprawling delivery ecosystem.
Robert Carroll, a New York state assemblyman who represents Brooklyn, said given the research showing more affluent consumers are more likely to buy online, $3 is not going to break the bank, and such a fee could be a boon to the state’s infrastructure budget. For several years he has been championing a $3 delivery fee for most items delivered to residents of New York City, with exemptions for food, medicine, and baby formula.
“We wanted it to be a high enough fee to change behavior. We are trying to make people more thoughtful consumers and make sure packages get delivered together,” Carroll said.
Carroll said with over two million packages a day delivered in New York City, the fee would be a boon and largely bypass the city’s poorest residents.
“Unfettered, unregulated online deliveries and fulfillment centers, which have 24-hour truck traffic and waste, is not sustainable. We want to be sustainable,” Carroll said.
He first proposed the idea in 2019, but he is hoping the time is ripe for the fee now.
New York City leading mayoral candidate Zohran Mamdani has proposed making bus transportation free, something Carroll said could be funded through this tax.
“That would cost $600 million a year. Our bill would pay for that,” Carroll said, though he stressed that there has been no formal conversation with the Mamdani campaign team about his proposal.
The Mamdani campaign did not respond to a request for comment by press time.
