I'm not sure about the tax info, but in my experience, and from my research, it's pretty much always cheaper in the long run to buy the handset outright. It's rough for most to drop the 5 and 6 hundred plus for the premium phones at once, but over time you'll come out cheaper. I was blessed with my last 2 phones to have bonuses from my job that covered the cost of the phone, so I've been out of contract for about the last 6 years or so. I currently have an ATT Galaxy Note Flashed to run on Tmobile's network, with Solavei as my provider. Not really pressed about upgrading till the Note 3 is announced or Something comparable comes out. Now it's just a matter of budgeting so that I have the funds available when the next phone for me comes out. Sorry for the novel, but if you can swing it, buy it outright.