Consumers Need a Moratorium on State Retail Delivery Fees
As major retailers warn they’ll have to raise prices in response to President Trump’s tariffs, American consumers have been bracing for higher costs at checkout. But another, quieter threat to their wallets is emerging: a patchwork of state and local retail delivery fees that act as hidden taxes on everyday purchases. Without federal action, these fees could spread rapidly—making it more expensive for Americans to buy everything from groceries to school supplies.
Earlier this year, Maryland Governor Wes Moore proposed a 75-cent fee on all retail deliveries to boost state revenues. The fee would apply to all orders of tangible goods subject to state sales tax from companies with retail sales of $500,000 or more. It would cover not just online purchases of clothes, books, and furniture, but also food deliveries from platforms, like DoorDash, Uber Eats, and GrubHub. While the Maryland legislature ultimately did not include the fee in this year’s final budget, the prospect of an additional fee on all deliveries is concerning—and one that more Americans may face in the future unless Congress steps in.
Two other states have already enacted legislation to charge retail delivery fees. Colorado began imposing a 27-cent fee per delivery in July 2022, later increasing the rate to 29 cents. The fee applies to all motor vehicle deliveries to someone in Colorado that includes at least one tangible good subject to state sales and use tax. Only businesses with retail sales under $500,000 in the previous year are exempt. Minnesota followed suit in July 2024 with a 50-cent delivery fee on orders of $100 or more from retailers with $1 million or more in sales, although it exempted certain items such as drugs, foods, and baby products.
Other states are also exploring these fees. This year, legislators in both Hawaii and Mississippi have introduced bills proposing 50-cent and 30-cent retail delivery fees, respectively. Indiana legislators considered a bill allowing counties the option of imposing their own retail delivery fees. And previously, lawmakers in Nebraska, New York, and Washington floated similar proposals.
State policymakers are turning to retail delivery fees in response to declining gas tax revenues, which have dropped as consumers adopt more fuel-efficient and electric vehicles. Proponents argue that delivery fees are a fair way to offset the resulting shortfall. As one Colorado legislator argued, “If you’re going to be creating wear and tear on our roads, you should help pay to maintain them.”
But it’s not clear that online shopping adds more wear and tear. In fact, consolidated delivery routes can reduce the number of individual car trips to stores. Indeed, one of the reasons e-commerce typically has a lower carbon footprint than brick-and-mortar retail shopping is the reduced road congestion. Moreover, delivery vehicles already contribute to road maintenance through gas taxes and vehicle registration fees. If fairness is the goal, it would make just as much sense to tax every consumer trip to the mall—yet no state is proposing that.
Moreover, targeting retail deliveries with a special surcharge is neither an equitable nor sustainable solution. A more rational alternative is a vehicle miles traveled (VMT) fee, which would charge drivers based on the distance they travel and apply equally to all vehicles in the same weight class.
Some advocates try to spin retail delivery fees as a cost imposed on big, out-of-state tech companies, like Amazon or DoorDash. But in practice, retailers pass these fees to customers. In effect, retail delivery fees are a regressive tax, disproportionately affecting working families, as well as those reliant on deliveries, such as many people with disabilities, residents who cannot drive or do not have a vehicle, immunocompromised individuals, and those living in food deserts.
These fees also discourage online shopping, which typically offers consumers more convenience, better prices, broader choices, and a smaller environmental footprint.
Unfortunately, unless lawmakers change course, more states are likely to treat these fees as an easy source of revenue. Indeed, the United States has gone down this path before with taxes on Internet services, where many state and local lawmakers saw a chance to boost their budgets by taxing this essential service. It was not until Congress rightly stepped in, by enacting the Internet Tax Freedom Act—first as a 10-year moratorium and, eventually, as a permanent safeguard—that Americans were protected from state and local lawmakers tacking on new fees to the Internet service bills.
Retail delivery is expected to grow significantly in the coming years, driven by innovations in warehousing, autonomous vehicles, drones, and sidewalk delivery robots. To ensure these advances can thrive—and to prevent short-term fiscal interests from undermining consumer access and economic progress—Congress should act now.
A federal moratorium on state and local retail delivery fees, modeled on the Internet Tax Freedom Act, would protect American consumers from an escalating patchwork of hidden charges on everyday purchases. Congress should enact a Retail Delivery Freedom Act to impose a 10-year moratorium on these discriminatory state and local fees. This approach would save families money at a time when budgets are already stretched thin, preserve consumer choice in how they shop, and ensure that essential deliveries remain affordable. By preventing this growing burden on household finances, Congress can protect both consumer wallets and the innovations that make modern shopping more convenient, accessible, and environmentally friendly for all Americans.
Image credit for social media preview: Julia Justo
