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Vaping Taxes in the United States and Around the World

Jim McDonald
October 31, 2021

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.

Why do governments tax vaping products?

Taxes on specific products—usually called excise taxes—are applied for various reasons: to raise money for the taxing authority, to change the behavior of those being taxed, and to offset environmental, medical, and infrastructure costs created by the use of products. Examples include taxing alcohol to dissuade excessive drinking, and taxing gasoline to pay for road maintenance.

Tobacco products have long been a target for excise taxes. Because the harms of smoking impose costs on the whole society (medical care for smokers), proponents of tobacco taxes say that tobacco consumers should foot the bill. Sometimes excise taxes on alcohol or tobacco are called sin taxes, because they also punish the behavior of drinkers and smokers—and in theory help convince the sinners to quit their wicked ways.

But because the government becomes dependent on the tax revenue, a decline in the smoking rate creates a financial shortfall that must be made up with some other source of income, or else the government must reduce spending. For most governments, the cigarette tax is a significant revenue source, and the excise is charged in addition to the standard sales tax assessed on most consumer products.

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.

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
While Alaska doesn’t have a state tax, 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 passed a 55% wholesale tax, which will take effect Jan. 1, 2021
  • 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, 2021, the tax is 63.49% of the wholesale cost for all nicotine-containing products.

On July 1, 2022, California will add 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
In 2020, Colorado voters approved an escalating tax on nicotine-containing vapor products (including bottled e-liquid) that mirrors the Colorado tax on non-cigarette tobacco products. The tax is currently 30% (of Manufacturer’s List Price), and will increase to 35% on Jan. 1, 2022; 50% in 2023; 56% in 2024; and finally to 62% in 2027. The tax is 50% lower for products given a Modified Risk designation by the FDA

Connecticut
The state has a two-tiered tax, assessing $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 96% 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

Illinois
A 15% wholesale tax on all vaping products. 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
Indiana included a two-tiered vape tax in its budget bill in 2021. The new tax will be 25% of wholesale cost on closed-system products like prefilled pods, and 15% at retail (a sales tax) on open-system products like bottled. The tax will take effect July 1, 2022

Kansas
A $0.05 per milliliter tax on all e-liquid, with or 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

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

Maine
A 43% wholesale tax on all vaping products

Maryland
A 6% sales tax on all open-system vaping products (including e-liquid) and a 60% tax on 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 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

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

New Jersey
New Jersey taxes 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 Jersey legislators voted in January 2020 to essentially double the two-tiered e-liquid tax, but the new law was vetoed by Governor Phil Murphy

New Mexico
New Mexico has a two-tiered e-liquid tax: 12.5% wholesale on bottled liquid, and $0.50 on each pod, cartridge, or cigalike with a capacity under 5 milliliters

New York
A 20% retail tax on all vapor products

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 nicotine “inhalant delivery systems,”, including hardware and “components” (which include e-liquid). The tax also includes heated tobacco products (HTPs) like IQOS, but exempts all vaping products sold in licensed cannabis dispensaries

Pennsylvania
Pennsylania’s 40% wholesale tax was originally assessed on all vapor products, but a court ruled in 2018 that the tax can only be applied to e-liquid and devices that include e-liquid. The PA vapor tax shuttered more than 100 small businesses in the state during the first year after its approval

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

Vermont
A 92% wholesale tax on e-liquid and devices—the highest tax imposed by any state

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

Washington State
The state passed a two-tiered retail e-liquid tax in 2019. It charges buyers $0.27 per milliliter on e-juice—with or without nicotine—in pods and cartridges smaller than 5 mL in size, and $0.09 per milliliter on liquid in containers larger than 5 mL

West Virginia
A $0.075 per milliliter tax on all e-liquid, with or without nicotine

Wisconsin
A $0.05 per milliliter tax on e-liquid in closed-system products (pods, cartridges, cigalikes) only—with or without nicotine

Wyoming
A 15% wholesale tax on all vapor products

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

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

Cyprus
A €0.12 ($0.14 US) per milliliter tax on all e-liquid

Denmark
The Danish parliament has passed a DKK 2.00 ($0.30 US) per milliliter tax, which will take effect in 2022. Vaping and harm reduction advocates are working to reverse the legislation

Estonia
In 2018, Estonia imposed a €0.20 ($0.24 US) 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 ($0.34 US) per milliliter tax on all e-liquid

Germany
Following the June 2021 passage of the Tobacco Tax Modernization Act, Germany will impose a €0.16 ($0.19 US) per milliliter tax on all e-liquid beginning July 1, 2022. The tax will increase in steps until it reaches €0.32/mL in 2026

Greece
A €0.10 ($0.11 US) 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

Italy
After years of punishing consumers with a tax that made vaping twice as expensive as smoking, the Italian parliament approved a new, lower tax rate on e-liquid in late 2018. The new tax is 80-90% lower than the original. The tax now amounts to €0.08 ($0.09 US) per milliliter for nicotine-containing e-liquid, and €0.04 ($0.05 US) for zero-nicotine products. For Italian vapers who choose to make their own e-liquid, PG, VG, and flavorings are not taxed

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
The Kenyan tax, which was implemented in 2015, is 3,000 Kenyan shillings ($27.33 US) on devices, and 2,000 ($18.22 US) on refills. The taxes make vaping far more expensive than smoking (the cigarette tax is $0.50 per pack)—and are probably the highest vape taxes in the world

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 ($0.01 US) per milliliter tax, and an additional tax (€0.005 per milligram) on the weight of the nicotine used

Lithuania
A €0.12 ($0.14 US) 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

Montenegro
A €0.90 ($1.02 US) 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 contains allows automatic increases in the tax rate July 1 of each year from 2020 to 2023

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 10 Philippines pesos ($0.20 US) per 10 milliliters (or fraction of 10 mL) tax on nicotine-containing e-liquid (including in prefilled products). In other words, any volume over 10 mL but under 20 mL (for example, 11 mL or 19 mL) is charged at the rate for 20 mL, and so forth

Poland
A 0.50 PLN ($0.13 US) per milliliter tax on all e-liquid

Portugal
A €0.32 ($0.37 US) 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 $0.21 US) 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 ($0.20 US) per milliliter tax on nicotine-containing e-liquid

South Korea
The first country to impose a national vape tax was the Republic of Korea (ROK, 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). (This is similar to the United States, where the federal cigarette tax was originally earmarked to pay for the Children’s Health Insurance Program). 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

Sweden
A 2 krona per milliliter ($0.22 US) tax on nicotine-containing e-liquid

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

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

Sources

Vaping360 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.

Smokers created vaping without any help from the tobacco industry or anti-smoking crusaders, and vapers have the right to keep innovating to help themselves. My goal is to provide clear, honest information about the challenges vaping faces from lawmakers, regulators, and brokers of disinformation. I recently joined the CASAA board, but my opinions aren’t necessarily CASAA’s, and vice versa. You can find me on Twitter @whycherrywhy
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Dave K
Dave K
1 year ago

Great breakdown of the situation. Can’t claim to be surprised, but it’s disgusting to see an additional $26 dollars in taxes on a $99 e-liquid purchase, here in Virginia.

Devin
Devin
7 months ago
Reply to  Dave K

consider yourself lucky I just tried to place a $38.00 order only to be hit with $45.00 in taxes so including the shipping it turned into $100 for 3 120ml bottles. so now i have to find an alternate option.

Ivana
Ivana
1 year ago

Hello, I see that you have made a mistake in Serbia. A 4.32 Serbian Dinar is not $0.41 US, but $0.041 US. And in Kenya it is 2,500 not 2,000 (amount in dollars is correct).

Jay
Jay
1 year ago
Reply to  Jim McDonald

Any ideal who isn’t taxing on vaping products in America? Question can you make a article breaking down the cost of tax added to vaping ? Like if 65% tax what that might add to say $100 purchase.

Jay
Jay
6 months ago

Excellent breakdown of the tax rates! Thank you for the article. These rates are utterly ridiculous in my opinion. It’s a pure money grab by our illustrious representatives that want to line their pockets once again. Is there any push-back happening on this??

Otis
Otis
6 months ago

The information on OR is incorrect.

reneer
reneer
5 months ago

Wait until the lawsuits start.

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