Starting mid-February, Florida residents who subscribe to Netflix will see a new charge on their monthly bill, a result of the state’s Communication Services Tax. This tax, set at 5.07%, will be applied to sales of communication services, including streaming music and video, cable and satellite television, and mobile services.
This move by Netflix is in compliance with Florida law, which mandates that businesses must itemize and separately state taxes on customer bills. The overall tax rate that Florida subscribers will see on their Netflix bill combines a 2.52% gross receipts tax with a 4.92% communication services tax, totaling a 7.44% additional charge.
The implementation of this tax is part of broader efforts by states to apply taxes to streaming services similarly to how cable TV companies are taxed, aiming to offset financial losses due to the increasing trend of cord-cutting.
While some states and cities have successfully implemented taxes on streaming services, such as Chicago’s “Amusement Tax” which adds a 9% fee to streaming services and reportedly collected over $30 million from streaming subscribers in 2021, others have faced legal challenges and resistance.
For instance, a recent bill in Missouri aimed to prevent local governments from taxing video streaming services, and a U.S. judge ruled that streamers do not maintain a physical presence like cable TV providers, suggesting they shouldn’t be taxed in the same way.
Netflix informed its Florida subscribers of this upcoming tax via email, emphasizing that their subscriptions will be subject to both local and state taxes as part of the Florida Communications Services Tax from February 15, 2024.
This change comes after Netflix announced price increases for its subscription tiers in the fall, including a 10% increase for its most expensive subscription tier to $23/month and an increase for its lowest ad-free tier to $12/month, with the basic ad-supported plan remaining at $7/month. These prices do not include sales tax.
This development is significant for both Netflix and its subscribers in Florida, as it reflects the changing landscape of digital service taxation and the ongoing debate over how streaming services should be financially regulated and taxed.