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How High are Vaping Taxes in Your State?

3 min readBy: Adam Hoffer

This week’s tax map illustrates the variety of vaping and electronic nicotine delivery systems (ENDS) taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. designs employed by U.S. states. Higher taxes on vaping and ENDS products discourage smokers from switching to vaping products.

Since vaping entered U.S. markets roughly two decades ago, it has grown into a well-established product category and a viable alternative to smoking. So far, 31 states and the District of Columbia have imposed an excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. on vaping products.

Vapor taxing methods vary. Authorities tax based on manufacturer, wholesale, or retail price (ad valorem), volume (specific), or with a bifurcated system that has different rates for open and closed tank systems.

Of those that tax wholesale values, Minnesota levies the heaviest tax at 95 percent, followed closely by Vermont at 92 percent. On the other end of the spectrum, Connecticut levies a 10 percent wholesale tax and Wyoming applies a 15 percent wholesale tax.

Delaware, Kansas, North Carolina, and Wisconsin all share the lowest rate per milliliter (mL) at $0.05 per mL. Louisiana has the highest rate per mL in the country after tripling its rate from $0.05 per mL to $0.15 per ml in 2023.

The following map shows where state vapor taxes stand as of July 1, 2023.

2023 State Vape Tax Rates Compare State Vapor Tax Rates and State Vaping Tax Rates

Vapor products can deliver nicotine, the addictive component of cigarettes, without the combustion and inhalation of tar that come with smoking cigarettes. While more research relating to the potential harm-reduction qualities of vapor products is needed, for now, the consensus is that vapor products are less harmful than traditional combustible tobacco products. Public Health England, an agency of the English Ministry for Health, concludes that vapor products are 95 percent less harmful than cigarettes.

Given this difference in harm levels, it is important to understand the concept of harm reduction and its relevance for vapor product taxes. Vapor products—even if unhealthy in their own right—are highly attractive as an alternative to smoking. After all, one main reason smokers have a hard time quitting is the addictive nature of nicotine. Harm reduction is the concept that it is more practical to reduce the harm associated with the use of certain products rather than attempting to eliminate it completely through ineffective bans or punitive levels of taxation.

Protecting access to harm-reducing vapor products is intertwined with tax policy because nicotine-containing products are economic substitutes. Low tax rates on vaping encourage consumers to switch from combustibles. High excise taxes on harm-reducing vapor products risk harming public health by pushing vapers back to smoking. A recent publication found that 32,400 smokers in Minnesota were deterred from quitting cigarettes after the state implemented a 95 percent excise tax on vapor products.

If the policy goal of taxing cigarettes is to encourage cessation, vapor taxation must be considered a part of that policy design. For more discussion on the ideal design for vapor taxes and other alternative nicotine products, see our recent report.

Vaping Tax Rates by State, 2023

State Vape Tax Rates
Alabama No Tax
Alaska No Tax
Arizona No Tax
Arkansas No Tax
California56.32% of wholesale; 12.5% of retail
Colorado50% of manufacturing price
Connecticut10% of wholesale price
Delaware0.05 per mL
District of Columbia80% of wholesale
Florida No Tax
Georgia7% wholesale (open) + $0.05 per mL (closed)
Hawaii70% wholesale
Idaho No Tax
Illinois15% wholesale
Indiana15% retail (open); 15% wholesales (closed)
IowaNo Tax
Kansas$0.05 per mL
Kentucky15% wholesale (open), $1.50/cartridge (closed)
Louisiana$0.15 per mL
Maine43% of wholesale
Maryland12% retail (60 % if less than 5mL)
Massachusetts75% of wholesale
Michigan No tax
Minnesota95% of wholesale
Mississippi No tax
Missouri No Tax
Montana No Tax
Nebraska No Tax
Nevada30% of wholesale
New Hampshire8% wholesale (open), $0.30 per mL (closed)
New Jersey$0.10 per mL (open); 10% retail (closed)
New Mexico12.5% wholesale; $0.50 per cartridge
New York20% retail
North Carolina$0.05 per mL
North Dakota No Tax
Ohio$0.10 per mL
Oklahoma No Tax
Oregon65% of wholesale
Pennsylvania40% wholesale
Rhode Island No Tax
South Carolina No Tax
South Dakota No Tax
Tennessee No Tax
Texas No Tax
Utah56% of wholesale
Vermont92% of wholesale
Virginia$0.066 per mL
Washington$0.09 per mL open; $0.27 per mL closed
West Virginia$0.075 per mL
Wisconsin$0.05 per mL
Wyoming15% of wholesale
Source: State Statutes; Bloomberg Tax

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