Excise Taxes Levied on Vaping Products in 30 States

Thirty U.S. states plus the District of Columbia began the new year on Jan. 1 with taxes on vaping products and e-cigarettes in place. In 2015, only three states and the District of Columbia imposed taxes on vaping products.

According to the Federation of Tax Administrators, the states without vape taxes as of February 2022 are: Alabama, Arizona, Arkansas, Florida, Hawaii, Idaho, Iowa, Michigan, Mississippi, Missouri, Montana, Nebraska, Oklahoma, Rhode Island, South Carolina, South Dakota, Tennessee, and Texas.

Bubba Lange, writing for Avalara, states Indiana doesn’t have a state vape excise tax as of this writing, but one will take effect on July 1 of this year. Alaska doesn’t have a statewide vape excise tax, but certain municipalities within the state collect a local tax, including Anchorage and Juneau.

“More states are likely to start collecting excise tax on vape products soon. Our last count had 12 additional states considering adding specific vape taxes,” Lange writes. “In addition, two states currently have local jurisdictions collecting additional excise taxes on vape products: Cook County and the city of Chicago in Illinois, and Montgomery County in Maryland.”

There are a lot of challenges in keeping up with excise taxes, states Lange. Most importantly, “you have to invoice your customer correctly to ensure you collect the right tax money.”