The game of Monopoly has a whole load of different rules that might not be that obvious to the casual or first-time player. One of these is the Luxury Tax.
If you’ve ever played Monopoly and wondered what the Luxury Tax is all about, or wondered if this is a good square to land on, then keep reading as I will explain all about the Monopoly Luxury Tax rules.
What Is Luxury Tax In Monopoly?
Luxury Tax is a space on the 4th side of the Monopoly board, between Park Place and Boardwalk. If you land on this space you must pay a Luxury Tax to the bank. This is $100 in the current edition of the game.
Due to its position between the two most expensive squares on the board, landing on the Luxury Tax could be quite a lucky escape. If one of your opponents owns both Park Place and Boardwalk and has built houses or a hotel on them, the rent can be sky-high. If they have a hotel it is $2000!
In this situation, paying just $100 in tax won’t seem quite so bad!
How Much Is Luxury Tax?
Luxury Tax in Monopoly is $100. If you land on this space you must immediately pay your tax to the Bank. Older editions of the game had the Luxury tax set at $75, but this was increased to $100 in 2008.
The original version of Monopoly was released in 1935, with Luxury Tax set at $75. It stayed at this price way for more than 70 years (if only real taxes stayed the same for so long!), but was increased in 2008 when the whole game had a graphic redesign.
This change in the cost of Luxury Tax brought the US version of Monopoly in line with the British version. Over in the UK, there is no Luxury Tax space, theirs is called Super Tax. This has always been set at $100.
If you like the idea of being able to set your own tax rate then you’ll like the 2000 Mac CD version of Monopoly which allowed you to customize the Luxury Tax. You could set the tax to be absolutely nothing (which seems a bit pointless), $75, $150, or a whopping $300.
Where Does Luxury Tax Money Go?
When you pay Luxury Tax in Monopoly, the money goes to the bank. One player should be nominated as a banker and they will collect fines and taxes as well as pay each player their salary.
Some of you may be surprised to read that taxes and fines go to the bank as it’s very common for people to put their fines and taxes into the middle of the board. This is not in the official game rules but is a very popular Monopoly house rule.
Many people don’t even realize that putting fines and taxes in the middle of the board and collecting them when you land on the Free Parking corner square isn’t in the official rules. In fact, there are probably a few little-known Monopoly rules that you haven’t heard of.
But, if you want to stick to the true rules (and prevent your game from taking too long), then you should pay your Luxury Tax and other fines straight to the bank.
Suggested read: How Long Does Monopoly Take?
What Happens When You Can’t Pay Luxury Tax?
If you can’t pay Monopoly’s Luxury Tax then you must declare yourself bankrupt. This means that you are out of the game. Remember that before you do this you can sell off any assets that you have to raise the funds to pay the tax.
If you own any properties, houses, or hotels then you should be able to avoid going bankrupt. Properties can be mortgaged back to the bank for half of their face value (or you might be able to sell one to another player for a higher price).
Similarly, houses and hotels can be sold at half the price you paid for them (as listed on the Title Deed).
If you are really strapped for cash then you could try and sell a Get Out of Jail Free card to one of your opponents, but you may struggle to find a buyer!
If, after selling all your assets you still can’t pay the tax, then you are bankrupt and out of the game.
I hope that this post has explained Monopoly’s Luxury Tax to you. While it is not a great square to land on, there are definitely worse ones (like Income Tax which is twice as much), and it beats paying out huge rent to one of the other players.