Premium Cigar Taxes by State, 2024
Over 500 million premium cigars were sold in the United States in 2023. With each sale comes a complex tax landscape.
4 min readWashington‘s tax system ranks 45th overall on the 2025 State Tax Competitiveness Index. Washington forgoes an individual income tax on wage income due to constitutional constraints, though the state recently imposed a tax on high earners’ capital gains income, a policy that raised constitutional questions but ultimately secured the assent of the state supreme court. The constitution has been similarly interpreted as blocking a corporate income tax, but Washington instead imposes a high multiple-rate gross receipts tax, called the Business & Occupation Tax. Because it is based on gross revenues rather than net income (profits), it yields very high rates of taxation on low-margin businesses and leads to tax pyramiding, where goods and services have the tax embedded several times over, imposed on each transaction within the production process.
The state’s sales tax, imposed atop the gross receipts tax, is not just a high rate but is also imposed on a base that includes an unusual share of business inputs, particularly in the digital products space. Washington also levies a progressive real estate transfer tax and the nation’s highest-rate estate tax. High UI taxes and an uncompetitive UI tax structure also contribute to the state’s poor Index ranking despite the state forgoing an individual income tax, which might otherwise be expected to yield a much more competitive tax environment.
Category | Rank | Rank Change | Score |
---|---|---|---|
Overall | 45 | 0 | 4.44 |
Corporate Taxes | 47 | 0 | 3.87 |
Individual Income Taxes | 15 | 2 | 5.74 |
Sales Taxes | 50 | 0 | 2.94 |
Property Taxes | 25 | -1 | 5.16 |
Unemployment Insurance Taxes | 44 | -2 | 4.00 |
Over 500 million premium cigars were sold in the United States in 2023. With each sale comes a complex tax landscape.
4 min readPolicymakers can and should address taxpayers’ legitimate grievances about out-of-control property tax bills, but they should do so without upending a system of taxation that is more efficient, fair, and pro-growth, and better suited to municipal finance, than any of the alternatives.
39 min readThe State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.
115 min read