Indiana Governor Signs Budget Bill With New Vapor Taxes

Indiana’s $44 billion budget for fiscal years 2022 and 2023, signed by the governor, contains new taxes on electronic cigarettes. Gov. Eric Holcomb signed H.B. 1001 Thursday. The bill adopts new taxes on open and closed cartridges of e-cigarettes. The tax is 25 percent wholesale on closed systems like vaping pods and 15 percent retail on open systems like refillables.

The Senate had originally planned on a flat 10 percent tax at retailers, but that was highly criticized as being too low, according to WTHR.com .

“We are very pleased that the state legislature has recognized the importance of implementing a meaningful tax on vaping and e-liquids. We pushed back on the original Senate amount because it was not nearly enough to have an effect on discouraging Hoosier youth from taking up vaping, which too frequently leads to cigarette smoking for this group,” said Kevin Brinegar, president and CEO Indiana Chamber of Commerce. “Ultimately, Senate leadership recognized this as well and, working with House leaders, has put forth a strong tax system on vaping and e-liquids. Now, all of those products will be taxed on par with traditional tobacco ones, as they should be.”

The Senate rejected a 50-cents-per-pack increase in the state’s cigarette tax. The state’s 99.5-cents-per-pack rate was last raised in 2007. A group of health industry and other business representatives had been pushing for a $2-per-pack increase to tamper down on the state’s 21.1 percent smoking rate for adults.

“While the Indiana Chamber is still disappointed that there was very little interest in raising the cigarette tax this session, imposing the state’s first vaping and e-cigarette tax is a big step and will positively impact the health of many young Hoosiers in particular,” Brinegar said.