Indiana Bill Would Lower E-cigarette Excise Taxes

An excise tax on vaping products was set to take effect on July 1 in Indiana. A recently passed bill in the state’s Legislature, however, could lower those taxes before the new law goes into effect.

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Both the Indiana House and Senate have approved the measure that would reduce the tax on closed-system vaping products, such as disposable e-cigarettes, from 25 percent of the wholesale price to 15 percent.

Senate Bill 382 is likely headed to a House-Senate conference committee for minor negotiations, but the bill’s author expects the Legislature to send the bill to the governor. “I don’t anticipate any [significant] change. They approved it in the House; we’ll probably just leave it where it is,” said author Sen. Travis Holdman, told the Indianapolis Business Journal.

Some lawmakers believe the tax rate for closed-system vaping products was set erroneously high last year; the reduction would match the 15 percent tax rate on the retail price of open-system products, such as refillable vaping pods. Under SB382, that rate would remain unchanged.

The tax reduction is part of a broader bill filled with minor tax corrections requested by the Indiana Department of Revenue and Gov. Eric Holcomb’s administration. Indiana’s tax on vaping products was created in the biennial budget near the end of last year’s legislative session. Lawmakers rejected a long-debated 50-cents-per-pack increase in the state’s cigarette tax, and in lieu of that, created the vaping-products tax.

Holdman said he does not know if the governor is on board with the vaping tax reduction’s being added to the Department of Revenue cleanup bill. A spokesperson for Holcomb said the governor will “review every piece of legislation that comes across his desk to make the best determination for all Hoosiers,” but declined to answer further questions about the tax reduction.