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How are Taxi Fares Calculated?

Tricia Christensen
Updated May 23, 2024
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Taxi fares are calculated in several different ways. In the simplest circumstances, a taxi may merely agree on a set price for travel from one destination to another. For example, a taxi at the Orange County, California airport might charge a set rate for a trip to a nearby hotel or to Disneyland. These taxi fares could range from 20-30 USD dollars (USD), or higher on holidays or during seasonal peaks. Sometimes a taxi driver may be willing to negotiate a set price with a potential passenger.

More frequently, taxi fares have a rather complex formula for calculation. Taxi fares are charged based on use, time, and mileage. Immediately upon climbing into a taxi, the passenger is charged a use fee. This dollar amount varies; it is sometimes as little as a couple of dollars, and sometimes much higher in congested areas.

The use fee does not take distance into account. The fee is set, and when a taxi driver turns on his or her meter, the counter often shows the starting point at the use fee. Generally, the next stage in calculating taxi fares is to charge by time and mileage.

The reason that time is calculated is because not all taxis will take the same amount of time to get to a destination. Heavy traffic may be a factor. Thus there may be a charge per a set amount of minutes, or even a per minute charge.

Usually, taxi fares charge both for minutes the taxi is used and for distance traveled. The meter usually charges a quarter or so per tenth of a mile (km). However, if the ride takes longer than expected, charges per amount of minutes may also be assessed. If your ride is relatively short, you may expect to pay both the use fee and the mileage fee, but may not be charged a time fee. If the ride is long because of traffic, time fees may also be incurred.

In heavy traffic, if you're only going a few blocks, it may be far more economical to take a bus or to walk. However, if you are willing, paying taxi fares is certainly a viable option. Only expect to pay more for a ride that takes more time to complete.

In addition, most taxi drivers also expect tips beyond the set fares. Generally tipping ranges from 10-20% of the fare, depending upon how well service was provided. A great conversation with a taxi driver warrants a better tip. A taxi driver who, on the other hand, takes years off your life with his or her expedient driving may deserve a lesser amount. A tip, unlike a taxi fare, is up to the rider’s discretion.

WiseTour is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Tricia Christensen
By Tricia Christensen , Writer
With a Literature degree from Sonoma State University and years of experience as a WiseTour contributor, Tricia Christensen is based in Northern California and brings a wealth of knowledge and passion to her writing. Her wide-ranging interests include reading, writing, medicine, art, film, history, politics, ethics, and religion, all of which she incorporates into her informative articles. Tricia is currently working on her first novel.

Discussion Comments

By anon1005928 — On Dec 21, 2021

I have lived in Japan for many years and I take taxis frequently. I have never heard of such a thing as tipping a taxi driver. It is not expected at all.

By anon14141 — On Jun 10, 2008

One suggestion. There are online taxi fare estimators online that can calculate the fare for you. I have used them in Chicago and Boston, and they seem very accurate.

Tricia Christensen

Tricia Christensen


With a Literature degree from Sonoma State University and years of experience as a WiseTour contributor, Tricia...
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