8 Rules for Duty-Free Shopping at the Airport

The number one rule of any "discount" price offering, anywhere and on anything, is to know the prices for those items at conventional U.S. retail and discount outlets. You really don't want to pay $40 for a bottle of single malt Scotch at a European airport only to find it on sale for $35 at your local Costco.

Airport stores set their prices at levels they think the market will bear, not at bare-bones minimum levels, and any "percent off" promotions likely apply to local prices, not what you pay at home. Nothing is automatically a good value simply because a duty-free airport shop says it is.

Duty-free airport stores let you avoid two potentially big tax bites: value-added tax (VAT) in the country where you buy an item and U.S. duties and taxes. VAT rates, especially in Europe, are not chump change; they generally run in the 15 to 30 percent range and apply to almost everything. But the combination of U.S. federal, state, and local sales taxes is especially stiff on tobacco and liquor. Obviously, then, liquor and tobacco are usually the best deals you are likely to find in an airport, and you see both featured prominently at just about every tax-free store.

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Although often highlighted at tax-free stores, electronics, optical goods, and related items are generally not good tax-free buys for U.S. travelers. U.S. retail markups are among the world's lowest, and you aren't likely to find any cameras, watches, or portable devices that sell for less at tax-free stores than at Walmart, Costco, Best Buy, or Amazon. Those items may be good buys for people who live in high-tax or high-markup countries, but they're generally not for you.

Perfumes, high fashion clothing, and accessories may or may not be good deals. High-fashion items typically carry very high markups, and suppliers sometimes deliberately lower those markups at airport stores. Although you may not have as good a fix on home prices as with tobacco and liquor, you can still make a careful assessment of relative value before you buy.

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Unless you're a shopaholic, the U.S. limitations on what you can bring home duty-free are more than generous: $800 per person every 30 days from most places, $1,600 from U.S. insular possessions (American Samoa, Guam, and the U.S. Virgin Islands) and many Caribbean areas. Typically, you must have been outside the country for 48 hours, although different rules apply in a few cases. But even if you go over those generous limits, you will probably pay no more than about 4 percent on the overage.

Special limits apply to liquor and tobacco. In most cases, you can bring in one liter of alcoholic beverages; more from a few locations. But even if you bring in more than one liter, the combined duty and excise tax typically amounts to less than $1 a liter on wine and $5 a liter on hard liquor. Keep in mind that U.S. customs officials also enforce state liquor limits, if any, at your entry airport. You can bring in 1,000 cigarettes or 100 cigars; different rules apply to overseas possessions. Special limits also apply to perfumes and fragrances that carry trademarks registered in the U.S.

With liquor and tobacco, the typical pattern is that you buy it at the airport store and the store delivers it at the gate or on board your departing flight. You then take it with you as carry-on baggage to your U.S. entry airport.

If you have a connecting flight at your U.S. arrival airport, a recent rule change by the TSA means you need no longer pack liquor into a checked bag for that connecting flight. If the tax-free store packs it in a "transparent, secure, tamper-evident" bag, you can keep it as carry-on for the connecting flight; you must also display the receipt for your tax-free purchase.

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Import allowances apply only to items you bring with you on your flight or ship. If you buy something and have it shipped, or buy gifts shipped to someone else, you have to pay duty. But, in many cases, the actual duty may not be a lot of money: The real problem is the paperwork and hassle to receive it. In a best-case scenario, the worst you'll encounter is a trip to the Post Office to pay duty, but with some items you may have to deal with import brokers.

The price of bringing in an extra bottle of liquor is minimal. But failing to declare something can bring a big penalty and a lot of hassle. So declare everything you're bringing home.

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