Excise Tax
A government levy on specific goods, activities, or services, often embedded in the product price.
What is Excise Tax?
An excise tax is a levy imposed on the production, sale, or use of specific goods and services rather than on general income or wealth. Common federal excise taxes in the U.S. apply to gasoline, alcohol, tobacco, firearms, airline tickets, and certain healthcare transactions. Excise taxes may be specific (a fixed amount per unit, such as cents per gallon) or ad valorem (a percentage of price). Because they are often embedded in product prices rather than shown separately at checkout, consumers may be unaware they are paying them.
Example
The federal gasoline excise tax is 18.4 cents per gallon, collected from fuel producers who pass the cost to retailers and ultimately consumers. A driver filling a 15-gallon tank pays roughly $2.76 in federal excise tax, plus state fuel excise taxes averaging 26–30 cents per gallon, all embedded in the pump price.
Source: IRS — Excise Tax