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Vaping Taxes in the United States and Around the World

Time: 2023-11-27 Views: 106

As vaping grows in popularity, it becomes a natural target for governments in need of tax revenue. Because vapor products are usually bought by smokers and ex-smokers, tax authorities correctly assume that money spent on e-cigarettes is money not being spent on traditional tobacco products. Governments have depended upon cigarettes and other tobacco products as an income source for decades.


Whether vaping devices and e-liquid deserve to be taxed like tobacco is almost beside the point. Governments see them pushing smokers away from tobacco, and they understand that the lost revenue must be made up. Since vaping looks like smoking, and there is substantial public health opposition to vaping, it becomes an attractive target for politicians, especially because they can justify the tax with a variety of questionable health claims.


Vape taxes are now being proposed and passed regularly in the United States and elsewhere. Taxes are usually opposed by advocates for tobacco harm reduction, representatives of vaping industry trade groups, and vaping consumers, and they’re supported by tobacco control organizations and the lung, heart and cancer associations.



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How Do Vape Taxes Work?

Most U.S. consumers pay a state (and sometimes also local) sales tax on the vaping products they purchase, so governments already benefit from vape sales even before excise taxes are added. Sales taxes are usually assessed as a percentage of the retail price of the products being purchased. In many other countries, consumers pay a “value added tax” (VAT) that works the same way as a sales tax. As for excise taxes, they come in a couple of basic varieties.


One of the most common forms of vape tax is assessed at retail. Some taxes cover all vaping products (like New York State’s 20% tax), and others target e-liquid only. Often the tax is only charged on sales of nicotine-containing e-liquid. Wholesale taxes are ostensibly charged to the wholesaler (usually a distributor) selling products to a business that will resell them at retail sites in the state. The tax is usually a percentage of the wholesale price (cost). It may be assessed on all vaping products or just nicotine-containing ones. Although wholesale taxes are not collected from the end user of the product, the cost of the tax is usually factored into the retail price of the product.



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Vaping Taxes in the United States

There is no federal tax on vaping products in the U.S. Bills have been introduced in Congress to tax vapes, but none has so far gained the traction necessary to pass.


Vape taxes in U.S. states, territories and municipalities

Before 2019, nine states and the District of Columbia taxed vaping products. That number more than doubled in the first seven months of 2019, when the moral panic over JUUL and teenage vaping that had grabbed headlines almost every day for over a year pushed legislators to do something to “stop the epidemic.” As of early 2021, 29 U.S. states have a tax on vapor products, along with some cities and counties, and the District of Columbia and Puerto Rico.


Alaska
Alaska doesn’t have a state tax, but some municipalities have their own vape taxes:

· Juneau Borough, NW Arctic Borough and Petersburg Borough have identical 45% wholesale taxes on nicotine-containing products

· Anchorage Borough has a 55% wholesale tax

· Matanuska-Susitna Borough has a 55% wholesale tax


California
The California wholesale tax on “other tobacco products” is set yearly by the state Board of Equalization. It mirrors the percentage of all taxes assessed on cigarettes. Originally this amounted to 27% of the wholesale cost, but after Proposition 56 increased the tax on cigarettes from $0.87 to $2.87 a pack, the vape tax increased drastically. For the year beginning July 1, 2023, the tax is 56.32% of the wholesale cost for all nicotine-containing products. On July 1, 2022, California
added a retail tax to the existing wholesale tax—12.5% on all nicotine-containing vaping products, including those bought online from retailers in other states.


Colorado
The current tax in Colorado is 50% of manufacturer’s list price on all nicotine-containing vapor products (including bottled e-liquid). The tax,
approved by Colorado voters in 2020, launched in 2021 at 30%, escalated to 35% in 2022, then to 50% in 2023. It will rise to 56% in 2024, and finally 62% in 2027. The tax is 50% lower for products given a Modified Risk (MRTP) designation by the FDA (but no manufacturer of a liquid-based vaping product has even applied for an MRTP authorization).


Connecticut
The state has a two-tiered tax on nicotine-containing vape products: $0.40 per milliliter on e-liquid in closed-system products (pods, cartridges, cigalikes), and 10% wholesale on open-system products, including bottled e-liquid and devices.


Delaware
A $0.05 per milliliter tax on nicotine-containing e-liquid.


District of Columbia
The nation’s capitol classifies vapes as “other tobacco products,” and assesses a tax on the wholesale price based on a rate that is indexed to the wholesale price of cigarettes. The tax is currently set at 91% of wholesale cost for devices and nicotine-containing e-liquid.


Georgia
A $0.05 per milliliter tax on e-liquid in closed-system products (pods, cartridges, cigalikes), and a 7% wholesale tax on open-system devices and bottled e-liquid. The taxes apply to products with and without nicotine.


Hawaii
The state has
approved a 70% wholesale tax on vaping products that will take effect Jan. 1, 2024.


Illinois
A 15% wholesale tax on all vaping products. The tax applies to products with and without nicotine. In addition to the statewide tax, both Cook County and the city of Chicago (which is in Cook County) have their own vape taxes:

· Chicago assesses a $1.50 per unit tax on any vaping product containing nicotine (bottled e-liquid or prefilled devices) and a separate $1.20 per milliliter tax on the liquid itself. (Chicago vapers have to also pay the $0.20 per mL Cook County tax.) Because of the excessive taxes, some vape shops in Chicago sell zero-nicotine e-liquid and shots of DIY nicotine to avoid the high per-mL tax on the larger bottles

· Cook County taxes products containing nicotine at a rate of $0.20 per milliliter


Indiana
A 15% tax on retail gross on all vaping product sales, with or without nicotine.


Kansas
A $0.05 per milliliter tax on all e-liquid. The tax applies to products with and without nicotine.


Kentucky
A 15% wholesale tax on bottled e-liquid and open-system devices, and a $1.50 per unit tax on prefilled pods and cartridges. The taxes apply to products with and without nicotine.


Louisiana
A $0.15 per milliliter tax on nicotine-containing e-liquid.


Maine
A 43% wholesale tax on all vaping products. The tax applies to products with and without nicotine.


Maryland
A 6% retail tax on all open-system vaping products (including nicotine-containing e-liquid) and a 60% tax on nicotine-containing e-liquid in containers with a capacity under 5 milliliters (pods, cartridges, disposables). In addition to the state tax:

· Montgomery County imposes a 30% wholesale tax on all vaping products, including devices sold without liquid.


Massachusetts
A 75% wholesale tax on all vaping products. The tax applies to products with and without nicotine. The law requires consumers to produce proof that their vaping products have been taxed, or they are subject to seizure and a fine of $5,000 for the first offense, and $25,000 for additional offenses.


Minnesota
In 2011 Minnesota became the first state to impose a tax on e-cigarettes. The tax was originally 70% of wholesale cost, but was increased in 2013 to 95% of wholesale on finished products that contain nicotine (cigalikes, pod vapes, bottled e-liquid) and are transported in from out of state. However, for bottled e-liquid produced in Minnesota, only the nicotine itself is taxed.


Nebraska
The state has no taxes on vaping products, but one city does:

· Omaha has included vaping products in the city’s 3% tobacco tax since 2019


Nevada
A 30% wholesale tax on all vapor products. The tax applies to products with and without nicotine.


New Hampshire
An 8% wholesale tax on open-system vaping products (including nicotine-containing e-liquid), and $0.30 per milliliter on closed-system products (pods, cartridges, cigalikes).


New Jersey
New Jersey taxes nicotine-containing e-liquid at $0.10 per milliliter in pod- and cartridge-based products, 10% of the retail price for bottled e-liquid, and 30% wholesale for devices.


New Mexico
New Mexico has a two-tiered e-liquid tax: 12.5% wholesale on bottled e-liquid, and $0.50 on each pod, cartridge, or cigalike with a capacity under 5 milliliters. The taxes apply to products with and without nicotine.


New York
A 20% retail tax on all vapor products. The tax applies to products with and without nicotine.


North Carolina
A $0.05 per milliliter tax on nicotine-containing e-liquid.


Ohio
A $0.10 per milliliter tax on nicotine-containing e-liquid.


Oregon
A 65% wholesale tax on all non-cannabis “inhalant delivery systems,”, including hardware and “components” (which includes e-liquid). The tax also includes
heated tobacco products (HTPs) like IQOS, but exempts all vaping products sold in licensed cannabis dispensaries. The tax applies to products with and without nicotine.


Pennsylvania
A 40% wholesale tax on e-liquid and devices that are sold with e-liquid included. The tax applies to products with and without nicotine.


Puerto Rico
A $0.05 per milliliter tax on e-liquid and a $3.00 per unit tax on e-cigarettes.


Utah
A 56% wholesale tax on e-liquid and prefilled devices. The tax applies to products with and without nicotine.


Vermont
A 92% wholesale tax on e-liquid and devices—the highest tax imposed by any state. The tax applies to products with and without nicotine.


Virginia
A $0.066 per milliliter tax on nicotine-containing e-liquid.


Washington State
A two-tiered tax charges $0.27 per milliliter on e-juice in pods and cartridges smaller than 5 mL in size, and $0.09 per milliliter on liquid in containers larger than 5 mL. The taxes apply to products with and without nicotine.


West Virginia
A $0.075 per milliliter tax on all e-liquid. The tax applies to products with and without nicotine.


Wisconsin
A $0.05 per milliliter tax on e-liquid in closed-system products (pods, cartridges, cigalikes) only. The tax applies to products with and without nicotine.


Wyoming
A 15% wholesale tax on all vapor devices and nicotine-containing e-liquid.

Vape Taxes Around The World

As in the United States, legislators around the world don’t really understand vapor products yet. The new products seem to lawmakers like a threat to cigarette tax revenue (which they truly are), so their impulse is often to impose high taxes and hope for the best.


International vape taxes


Albania
A 10 leke ($0.091 US) per milliliter tax on nicotine-containing e-liquid.


Azerbaijan
A 20 manats ($11.60 US) per liter tax (about $0.01 per milliliter) on all e-liquid.


Bahrain
The tax is 100% of the pre-tax price on nicotine-containing e-liquid. That equates to 50% of the retail price. The purpose of the tax is unclear, since vapes are supposedly banned in the country.


Belgium
Beginning Jan. 1, 2024, Belgium will impose a €0.15 per milliliter tax on all e-liquid.


Canada
A federal tax of $1 CAD (about $0.75 US) per 2 milliliters (or fraction thereof) on the first 10 mL in any bottle, pod, or cartridge, then $1 per additional 10 mL (or fraction thereof). The tax applies to all vaping products, with or without nicotine. Individual provinces may have additional taxes of their own. The tax, which is assessed on manufacturers or importers, took effect Oct. 1, 2022, but retailers were allowed to sell older, untaxed products until Dec. 31, 2022.


China (People’s Republic of China)
China has a two-pronged wholesale tax, assessing a 36% rate on the production or import of e-cigarettes, and a separate 11% tax on wholesale distribution (in China). The
new taxes were imposed beginning Nov. 1, 2022.


Costa Rica
A 20% wholesale tax on all vaping products and accessories.


Croatia
Although Croatia has an e-liquid tax on the books, it is currently set at zero.


Cyprus
A €0.12 per milliliter tax on all e-liquid.


Denmark
A DKK 2.00 ($0.30 US) per milliliter tax on all e-liquid.


Ecuador
A 150% wholesale tax on “other tobacco products” includes vaping products.


Estonia
In 2018, Estonia imposed a €0.20 per milliliter excise duty on all e-liquid. In December 2020, the Riigikogu (parliament)
suspended the tax—effective from April 1, 2021 and lasting until Dec. 31, 2022—with the goal of ending the large black market that has grown in the wake of the excessive tax (and a flavor ban). According to consumer nicotine group NNA Smoke Free Estonia, “self-mixed, cross-border and smuggled e-liquids account for 62-80% of the entire Estonian e-liquids market.”


Finland
A €0.30 per milliliter tax on all e-liquid.


Georgia
A tax of 0.2 Georgian Lari ($0.066 US) on all e-liquid.


Germany
A €0.16 per milliliter tax on all e-liquid. The tax will increase in steps until it reaches €0.32/mL in 2026.


Greece
A €0.10 per milliliter tax on all e-liquid.


Hungary
A HUF 20 ($0.07 US) per milliliter tax on all e-liquid.


Indonesia
The Indonesian tax is 57% of the retail price, and seems to only be meant for nicotine-containing e-liquid (“extracts and essences of tobacco” is the wording). The country’s officials seem to
prefer that citizens keep smoking.


Israel
On Feb. 16, 2023, the Israeli Tax Authority reduced the e-liquid tax slightly to 8.9 Israeli Shekels (NIS) per milliliter. (That’s about $2.50 US/mL—$75 for a 30 mL bottle!) The tax applies to e-liquid with or without nicotine, and includes pods, disposables, and bottled e-liquid. The tax takes effect immediately, although the Knesset (parliament) Finance Committee must approve it within 60 days, and the full Knesset can override the committee.


Italy
Taxe rates of about €0.13 per milliliter for nicotine-containing e-liquid, and €0.08 ($0.10 US) for zero-nicotine products are set to remain in effect through 2022.


Jordan
Devices and nicotine-containing e-liquid are taxed at a rate of 200% of the CIF (cost, insurance and freight) value.


Kazakhstan
Although Kazakhstan has an e-liquid tax on the books, it is currently set at zero.


Kenya
Kenya updated its excise duty rate on vaping products in 2022. The
current rates are 40% for devices, and 70 Kenyan shillings ($0.57 US) per milliliter on e-liquid. The e-liquid tax would add about 17 U.S. dollars to the price of a 30 mL bottle of vape juice.


Kyrgyzstan
A 1 Kyrgyzstani Som ($0.014 US) per milliliter tax on nicotine-containing e-liquid.


Latvia
The unusual Latvian tax uses two bases to calculate excise on e-liquid: there is a €0.01 per milliliter tax, and an additional tax (€0.005 per milligram) on the weight of the nicotine used. Latvia
updated its excise tax rates in October 2023, simplifying and increasing vaping and tobacco taxes. From March 1 to Dec. 31, 2024, e-liquid will be taxed at a rate of €0.24 per milliliter. From Jan. 1 to Dec. 31, 2025, the rate will increase to €0.29/mL. Beginning Jan. 1, 2026, the rate will go up to €0.35/mL.


Lithuania
A €0.12 per milliliter tax on all e-liquid.


Malaysia
A 10% tax on vaping devices and a 40 sen ($0.10 US) per milliliter tax on e-liquid. However, the government announced Oct. 29, 2021 that it
would begin taxing nicotine-containing liquid, which will require a change in the law that prohibits sales of nicotine-containing products except by pharmacies. (In early 2022, this tax was postponed).


Maldives
Nicotine-containing e-liquid is taxed at a rate of 200% of the CIF (cost, insurance and freight) value.


Montenegro
A €0.90 per milliliter tax on all e-liquid.


North Macedonia
An 0.2 Macedonian Denar ($0.0036 US) per milliliter tax on e-liquid. The law allows automatic increases in the tax rate July 1 of each year from 2020 to 2023.


Norway
While a 4.5 Norwegian Krone ($0.51 US) per milliliter tax is on the books, Norway doesn’t allow the import or sales of nicotine-containing vapes.


Paraguay
The law classifies e-cigarettes as tobacco products, and taxes them at 16% (probably based on the wholesale price). However, most sellers don’t register the products as tobacco, but import them under other classifications.


Philippines
A tax of 37 Philippine pesos (PHP) per milliliter for nicotine salt-based e-liquids, and 45 PHP per mL for freebase nicotine e-liquids. For both, the tax will increase by 5 pesos/mL each year until until 2023. From 2024 onward, the tax will increase by 5% each year.


Poland
A 0.55 Polish Zloty (PLN) ($0.14 US) per milliliter tax on all e-liquid.


Portugal
A €0.323 per milliliter tax on nicotine-containing e-liquid.


Romania
A 0.52 Romania Leu ($0.12 US) per milliliter tax on nicotine-containing e-liquid. There is a method by which the tax can be adjusted annually based on consumer price increases.


Russia
Disposable products (like cigalikes) are taxed at 50 rubles ($0.81 US) per unit. Nicotine-containing e-liquid is taxed at 13 rubles per milliliter.


Saudi Arabia
The tax is 100% of the pre-tax price on e-liquid and devices. That equates to 50% of the retail price.


Serbia
A 4.32 Serbian Dinar ($0.044 US) per milliliter tax on all e-liquid.


Slovenia
A €0.18 per milliliter tax on nicotine-containing e-liquid.


South Africa
A 2.90 Rand (about $0.15 U.S.) per milliliter tax on all e-liquid. The tax
took effect June 1, 2023.


South Korea (Republic of Korea)
The first country to impose a national vape tax was the Republic of Korea (usually called South Korea in the West)—in 2011, the same year Minnesota began taxing e-liquid. Currently the country has four separate taxes on e-liquid, each earmarked for a specific spending purpose (the National Health Promotion Fund is one). The various South Korean e-liquid taxes add up to a whopping 1,799 won ($1.60 US) per milliliter, and there is also a waste tax on disposable cartridges and pods of 24.2 won ($0.02 US) per 20 cartridges. However, the tax apparently
applies only to tobacco-derived nicotine products, leaving e-liquid made with synthetic nicotine untaxed.


Sweden
A 2 Swedish krona (SEK) per milliliter ($0.22 US) tax on nicotine-containing e-liquid up to 15 mg/mL. E-liquid containing 15-20 mg/mL is taxed at 4 SEK/mL.


Togo
Taxed up to 45% (believed to be based on the wholesale price).


Ukraine
A 3 Ukrainian hryvnia (UAH) ($0.11 US) tax per milliliter tax on all e-liquid.


United Arab Emirates (UAE)
The tax is 100% of the pre-tax price on e-liquid and devices. That equates to 50% of the retail price.


Uzbekistan
Global Tobacco Control
says an excise tax of 500 Uzbekistani so’m per milliliter ($0.05 US) was introduced on e-liquid in 2020, but we could find no confirmation or additional details.


We really appreciates any updates or corrections to the posted tax rates. Please comment below, and provide supporting information (newspaper articles, links to government websites, etc.) if it’s available.