There is no tax on checked baggage. From the way politicians speak about the transportation federal excise tax, the uninformed would think that this is a tax paid by the airlines. But, in reality, it is quite different.

In the United States, airlines generally do not pay the federal 7.5% excise tax on baggage fees that they are required to pay on the base ticket price. This is because current IRS regulations exempt "optional" services, such as checked baggage, excess weight charges, and seat selection fees, from the standard transportation tax imposed on the transport of persons. While passengers often feel these fees are a way for airlines to avoid taxation, the IRS officially supports this separation. However, airlines are still subject to standard corporate income taxes on the profits generated from these ancillary revenues. By unbundling these services from the base fare, airlines effectively lower the tax burden for the traveler on that specific portion of the cost, though it significantly complicates the overall pricing structure seen by consumers at checkout.