The United States & Global Vaping Taxes
While governments worldwide are witnessing smokers switching to vaping via wholesale e-cigarette supply from tobacco, they are tapping into the potential revenue. Public health concerns surrounding vaping also exist. So, politicians’ discussions often address vaping to warrant the vape tax citing health concerns.
Legislating and levying taxes on wholesale vaping supply devices and e-liquids is now underway in the United States and globally.
But wholesale vapors advocates don’t welcome taxes since vaping reduces tobacco damages, including vaping industry trade groups and consumers. Tobacco control organizations and the lung, heart, and cancer associations also support the pro-vaping community.
U.S. consumers mostly pay a state (at times local) sales tax on the vaping products they buy. It means even before excise taxes government can reap money from vape sales. In general terms, sales tax assessment is a percentage of the purchased products’ retail price. In other nations, consumers pay a value-added tax (VAT)—akin to a sales tax.
In the case of excise taxes, vape tax assessment is at retail. Some taxes cover various vaping products (viz. 20% tax of the New York State)—other states tax only e-liquid. Mostly the tax is levied solely on e-liquid (with nicotine) sales. Wholesale vapors’ taxes apply to the wholesaler (or a distributor) selling products to a business to resell at retail points. Such a tax forms a wholesale price or cost percentage. The price burden of wholesale taxes gets indirectly levied upon the product customers.
Vaping Taxes in the US
A federal tax on vaping products does not exist in the U.S. Bills to tax vapes have been floated in Congress but are yet to be passed with enough traction.
In the pre-2019 period, vaping products tax existed in nine states and the District of Columbia. In 2019’s initial seven months, the number of states taxing vaping products doubled as JUUL and teenage vaping fuelled concerns, pushing legislators to step in to prevent a potential epidemic.
By early 2021, 29 U.S. states began taxing wholesale e-cigarette supply and vapor products, including the District of Columbia and Puerto Rico.
While a state tax is absent in Alaska, a couple of municipalities levy vape taxes of their own:
- A 45% wholesale tax on nicotine products applies in Juneau Borough, NW Arctic Borough, and Petersburg Borough
- A 55% wholesale tax applies in Anchorage Borough.
- Matanuska-Susitna Borough’s wholesale tax is 55%.
The state Board of Equalization sets the California wholesale tax on “other tobacco products” yearly. It is a reflection of the amount of all assessed taxes on cigarettes. While it totaled 27% of the wholesale cost, Proposition 56 soared the cigarette tax from $0.87 to $2.87 a pack (also increasing the vape tax).
The applicable tax for all nicotine products, starting July 1, 2022, is 61.74% of the wholesale cost. With effect from (w.e.f.) July 1, 2022, a retail tax was added to the California wholesale tax (12.5% on all nicotine-led vaping products).
Colorado voters, in 2020, gave a green signal to an escalating tax on nicotine vapor (and bottled e-liquid). It is a reflection of the non-cigarette tobacco products tax in Colorado. Beginning at 30% of the manufacturer’s list price in 2021, it rose to 35% on Jan. 1, 2022. In 2023, it might reach 50%, 56% in 2024, and 62% in 2027.
While the tax is 50% less for products owing to the FDA’s Modified Risk (MRTP) designation, liquid vaping products are yet to apply for MRTP authorization.
With a two-tiered nicotine vape products tax, Connecticut has a $0.40 per milliliter tax on e-liquid in pods, cartridges, and cigalikes (close-system products or CSPs). A 10% wholesale tax applies to bottled e-liquid and vaping devices (open-system products or OSPs).
Delaware has a $0.05 per milliliter nicotine-led e-liquid tax.
District of Columbia
DC considers vapes as “other tobacco products.” So 91% of the wholesale cost for devices and nicotine-led e-liquid is assessed on the wholesale price per a rate indexed to the cigarettes’ wholesale price.
A $0.05 per milliliter tax on e-liquid in CSPs (viz. pods, cartridges, cigalikes) apply in Georgia. A 7% wholesale tax is applicable in Georgia on open-system devices (OSDs) and e-liquid (in bottles). The said taxes apply to products regardless of nicotine content.
A 15% wholesale tax is levied on vaping products in Illinois regardless of nicotine. In Chicago, a $1.50 per unit tax applies to any vaping products with nicotine, and a $1.20 per milliliter tax is in place for the liquid. Chicago vapers also pay a $0.20 per ML Cook County tax (taxing products with nicotine at $0.20 per milliliter).
A 15% tax on retail gross applies to all vaping product sales in Indiana. In Kansas, a $0.05 per milliliter tax applies to e-liquids. In Kentucky, a 15% wholesale tax on bottled e-liquid and OSDs. A $1.50 per unit tax applies to pre-filled pods and cartridges. While Louisiana has a $0.05 per milliliter tax for nicotine-led e-liquid, a 43% wholesale tax on vaping products exists in Maine.
In Massachusetts, a 75% wholesale tax is levied upon all vaping products, whereas in New York, the retail tax is 20%. Pennsylvania has a 40% wholesale tax on e-liquid.
Vaping Taxes in the World
While in Bahrain, the applicable tax is 100% of the pre-tax price on nicotine-led e-liquid, it comes to 50% of the retail price. Costa Rica applies a 20% wholesale tax on all vaping products and accessories. Cyprus has a €0.12 per milliliter tax on e-liquids.
In Denmark, a $0.30 per milliliter tax exists on all e-liquid. While Ecuador has a 150% wholesale tax on other tobacco and vaping products, Finland puts a €0.30 per milliliter tax on e-liquid.
Georgia has a $0.066 tax on all e-liquid in place. Germany’s tax rate for e-liquid is €0.16 per milliliter. It would rise to reach €0.32/mL in 2026. A €0.10 per milliliter tax on e-liquid is in place in Greece. Hungary levies a $0.07 per milliliter e-liquid tax.
In Indonesia, the tax is 57% of the retail price. In Israel, all vaping products attract a 270% wholesale tax plus an 8.16 NIS per milliliter e-liquid tax. In Malaysia, a 10% tax on vaping devices plus a $0.10 per milliliter e-liquid tax applies.
In Norway, a $0.51 per milliliter tax on nicotine-led vaping products applies. In Portugal, a €0.323 per milliliter tax levy applies on nicotine-led e-liquid. In Russia, a $0.81 per unit tax on disposable products applies, with a 13 rubles per milliliter tax on Nicotine-led e-liquid.
In Sweden, a per milliliter tax of $0.22 on nicotine-led e-liquid up to 15 mg/mL applies, plus e-liquid having 15-20 mg/mL attracts a 4 SEK/mL tax. Lastly, in the United Arab Emirates (UAE), 100% of the pre-tax price is levied on e-liquid and devices, totaling the retail price’s 50%.