Legal Definitions - excise tax

Excise Tax is a type of tax that is imposed on specific items that belong to a particular class of goods. These classes of goods are often luxury or specialty items, such as tobacco, fuel, and alcohol. The tax can be imposed on the manufacturer, retailer, or consumer, depending on the specific tax. Some excise taxes can be levied directly from the customer, such as property taxes and excise tax penalties on certain retirement account activity.

• A Federal excise tax is levied on motor fuel consumed during highway use. This means that when you buy gasoline for your car, a portion of the price you pay goes towards this tax. The proceeds from this tax are used for Federal highway projects.
• An excise tax is levied on tobacco products at the State level. This means that when you buy cigarettes or other tobacco products, you are paying an additional tax on top of the price of the product.
• An excise tax is levied on alcohol products at the State level. This means that when you buy beer, wine, or liquor, you are paying an additional tax on top of the price of the product.

These examples illustrate how excise taxes are applied to specific items that are considered luxury or specialty goods. The taxes are used to generate revenue for the government and to discourage the consumption of these items. By increasing the price of these goods, the hope is that people will be less likely to buy them, which can have health and social benefits.