Tobacco is the most highly taxed consumer product in the United States. The tools on this page allow you to explore state tax rates and the effects tax policy and tobacco regulations can have on state revenues, smuggling, and effective tax rates for different income groups.
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The excise tax family is growing. Over the last decade, several products have become subject to excise taxes or are in the process of becoming so. Given this development, it is more crucial than ever that lawmakers, businesses, and consumers understand the possibilities and, more importantly, limitations of excise tax application.
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This web tool allows taxpayers to see how cigarette tax revenues have changed since 1955. Across almost all states, a clear pattern of volatility emerges. Tax rate hikes are met with a momentary bump in revenue, followed by a falloff.
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New nicotine products, along with a greater consciousness about the dangers of smoking, have prompted millions to give up smoking. This has contributed to federal and state excise tax collections on tobacco products declining since 2010. Our new report outlines the best way to tax nicotine products based on health outcomes and revenue stability.
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People respond to incentives. As tax rates increase or products are banned from sale, consumers and producers search for ways around these penalties and restrictions.
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Several states are considering introducing or increasing taxes on vapor products to make up declining tax revenue from traditional tobacco products or to fill budget holes in the wake of the coronavirus pandemic. However, lawmakers should approach the issue carefully because flawed excise tax design on vapor products could drive consumers back to more harmful combustible products like cigarettes.
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Learn more about the FDA’s proposal to ban the sale of menthol cigarettes and flavored cigars. Including its effect on revenue & public health measures.
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Excise taxes are imposed on a specific good or activity, such as cigarettes, alcohol, and fuel. Because of their narrow base, excise taxes distort production and consumption choices. Sometimes this distortion is by design. Compare the effects of sales taxes and tobacco excise taxes with real policy examples.
Lawmakers in Colorado, and in the several other states considering flavor bans, should think twice before following in the footsteps of Massachusetts. A statewide ban on flavored tobacco products is more than likely to costs millions of dollars, increase smuggling, and have a negligible effect on public health.
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Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
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The FDA’s expected announcement of a national ban on menthol-flavored cigarettes and cigars with a characterizing flavor would carry significant revenue implications for both the federal government and state governments, with likely limited benefits in smoking cessation.
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A recent JAMA Internal Medicine study on the impact of the Massachusetts flavored tobacco ban indicates that it has been a success. Unfortunately, it left out a very important piece of information: cross-border trade.
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More than 300 billion cigarettes are sold each year in Indonesia—making it the world’s second-largest cigarette market to China. As such, it is important how Indonesia taxes tobacco products.
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Maine’s proposal to increase tobacco and vapor taxes has at least four major issues: flawed revenue allocation, risk of increased smuggling, regressivity, and violation of the harm reduction principle.
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Lawmakers in Washington need not revisit their vapor tax. The current tax is levied at an appropriate level and it has the right tax base.
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A proposal to introduce a wholesale tax on vapor products in Alaska could make switching from combustible tobacco products very expensive for smokers.
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Indonesia, the world’s second-largest cigarette market, has a uniquely complex system when it comes to taxing its tobacco consumption, which is almost exclusively cigarettes (98 percent).
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The nicotine tax proposal in the Build Back Better Act neglects sound excise tax policy design and by doing so risks harming public health. Lawmakers should reconsider this approach to nicotine taxation.
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In an effort to raise roughly $100 billion, the House proposal would double cigarette taxes and increase all other tobacco and nicotine taxes to comparable rates—a strategy with severe unintended consequences.
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The potential federal tax increase of over 1,600 percent on dipping tobacco as a result of the House Democrats’ proposal could result in state taxes and retail prices increasing by more than 50 percent in certain states.
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House Democrats’ newly released $3.5 trillion tax legislation includes a tax increase on tobacco, nicotine, and vapor products levied on tobacco manufacturers. But ultimately it would fall heavily on tobacco consumers—many of the group that earns less than $400,000 that President Biden pledged would not see a tax increase.
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Ireland and France levy the highest excise duties on cigarettes in the EU, at €8.42 ($9.60) and €6.61 ($7.53) per 20-cigarette pack, respectively. This compares to an EU average of €3.34 ($3.80). Bulgaria (€1.81 or $2.06) and Poland (€2.08 or $2.37) levy the lowest excise duties.
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Thirteen states have notable tax changes taking effect on July 1, 2021, which is the first day of fiscal year (FY) 2022 for every state except Alabama, Michigan, New York, and Texas. Individual and corporate income tax changes usually take effect at the beginning of the calendar year for the sake of maintaining policy consistency throughout the tax year, but sales and excise tax changes often correspond with the beginning of a fiscal year.
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Early signs indicate that flavors bans will not decrease tobacco consumption. It is not in the interest of the District of Columbia to pursue a public health measure that merely sends tax revenue to its neighboring jurisdictions without improving public health.
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