How Much Interchange was Paid on Sales Tax in the U.S.?
CMSPI estimates that U.S. merchants paid nearly $10 billion in interchange on sales tax, gasoline and diesel excise taxes, and alcohol excise taxes. Read below to see how the impact differed by state.
Estimated Interchange Paid on Select State-Level Taxes
Methodology
Please note: Estimates have been updated for 2023 to reflect the total card fee estimates provided in CMSPI’s State of the Industry Report. Gas and Diesel excise tax estimates have also been updated to reflect the impact of state excise taxes rather than federal.
Consumption numbers have been modeled using state specific growth metrics around number of new vehicles on the road between 2021 and 2023.
Interchange Estimates
Total interchange fees charged on credit and debit cards have been analyzed using CMSPI estimates and analysis of published credit card interchange fee schedules and Federal Reserve data on debit card interchange fees.
Interchange Paid on Sales Tax
We have taken the sales tax data from (source 1) to show total sales tax paid by state, and then using public financial reports from Visa and Mastercard, ascertained the total volume through debit and credit cards, which have been split by state by GDP (source 2).
Interchange Paid on Gasoline and Diesel Excise Tax
Using state-by-state gasoline and diesel consumption data (source) and state-by-state excise tax rates for diesel and gasoline (source) from the EIA, we’re able to estimate the total excise tax expenditure by state.
Interchange Paid on Alcohol Excise Tax
Sourcing beer, wine, and spirit consumption by state, we calculate the total excise tax expenditure by state using the excise tax rate by state as reported by the Tax Policy Center.