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The expanded Prevent All Cigarette Trafficking (PACT) Act, enacted March 2021, requires any business or person that sells, ships, or transfers ENDS for profit in interstate commerce to:Register with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Register with any states where they ship vapes and similar products, Verify the age of purchasers upon delivery, Comply with state, local, or tribal excise tax and reporting requirements. Basically, the amended PACT Act requires e-cigarettes and vaping products to be treated more like traditional tobacco cigarettes.
Currently there are no federal taxes on vape products, but that could change.
As of August 2024, 32 states and the District of Columbia tax vape products: California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. Rhode Island will tax electronic nicotine delivery systems starting January 1, 2025. More states will likely tax ENDS in the future since some have already tried to do so. Some states that already tax vaping products are raising vape tax rates. For example, the Colorado nicotine products tax on vapes increased in 2022, 2023, and 2024, and it will jump again in 2027. The Maryland sales and use tax rate for electronic smoking devices increased effective July 1, 2024. Several jurisdictions in Alaska have raised their vape taxes as well.
Local taxes on vape products exist in just a few states as of this writing. Alaska doesn’t tax e-cigarettes at the state level, but some jurisdictions in the state apply local taxes. These include: Anchorage Borough, Fairbanks North Star Borough, Juneau Borough, Northwest Arctic Borough, Petersburg Borough. There are local vape taxes on top of the statewide taxes in a few jurisdictions in Illinois (Chicago and Cook County) and Maryland (Montgomery County). Alabama, Colorado, Missouri, Nebraska, New York, Ohio, Pennsylvania, and Virginia also allow local governments to levy local taxes on vapor products. In fact, Blount County, Alabama, will tax vape products starting October 1, 2024.
Because of the varied nature of electronic nicotine delivery systems (ENDS), vape taxes can be shaped by several different factors. As with cigarettes and other tobacco products, e-cigarettes, vapes, and other ENDS are typically taxed either on a unit basis or on a percentage of the retail or wholesale price. Each jurisdiction defines the percentage tax base a little differently. Most states that tax vaping products use either the percentage or the unit. However, Connecticut, Georgia, Kentucky, New Hampshire, New Jersey, and New Mexico use both methods: They use the unit (per cartridge) for closed vaping products and a percentage of the price for open vaping products. Nebraska uses both, too, but the method is based on volume.
Vape taxes based on the unit may be affected by the type of cartridge used to contain the e-liquid: open or closed. Some states base the tax on the cartridge and/or disposability. Others, like Nebraska, base the tax on the milliliter (or fraction of a milliliter) of e-liquid purchased. With open containers, users must manually fill the tank with e-juice. Closed containers come filled and don’t have a conventional tank that can be refilled, but they can usually be reused with disposable cartridges containing e-liquid. Disposable cartridges contain a consumable vapor product at the time of sale. They’re not designed or intended to be reused or refilled, and they’re generally disposed of after use. All electronic nicotine delivery systems (ENDS) must be properly disposed of after use.
Some states only tax e-liquid that contains nicotine. Some tax all e-liquid products, even those containing no nicotine. For example, ENDS that don’t contain nicotine are not subject to the California excise tax on tobacco products, while ENDS that contain nicotine are subject to the tax. Note that a California Cigarette and Tobacco Products Retailer’s License is still required for businesses that only sell ENDS containing no nicotine.
Alabama No Yes May vary by jurisdiction, Alaska No Yes May vary by jurisdiction, Arizona No No N/A, Arkansas No No N/A, California Yes No Yes % of wholesale price/ % of retail price, Colorado Yes Yes Yes % of manufacturer's list price, Connecticut Yes No No Unit (closed) / % of wholesale price (open), Delaware Yes No Yes Unit, District of Columbia Yes No Yes % of wholesale price, Florida No No N/A, Georgia Yes No No Unit (closed) / % of wholesale price (open), Hawaii Yes No No % of wholesale price, Idaho No No N/A, Illinois Yes Yes No % of wholesale price, Indiana Yes No No % of retail price (open) / % of wholesale price (closed), Iowa No No N/A, Kansas Yes No No Unit, Kentucky Yes No No Unit (closed) / % of wholesale price (open), Louisiana Yes No Yes Unit, Maine Yes No No % of wholesale price, Maryland Yes Yes No % of retail price (different rates for open vs. closed), Massachusetts Yes No No % of wholesale price, Michigan No No N/A, Minnesota Yes No Yes % of wholesale price, Mississippi No No N/A, Missouri No No N/A, Montana No No N/A, Nebraska Yes Yes Yes Unit (≤3 mL) / % of retail price (≥3 mL), Nevada Yes No No % of wholesale price, New Hampshire Yes No Yes Unit (closed) / % of wholesale price (open), New Jersey Yes No Yes Unit (open) / % of retail price (closed), New Mexico Yes No No Unit (per cartridge) / % of wholesale price (open), New York Yes No No % of retail price, North Carolina Yes No Yes Unit, North Dakota No No N/A, Ohio Yes No Yes Unit, Oklahoma No No N/A, Oregon Yes No No % of wholesale price, Pennsylvania Yes No No % of wholesale price, Rhode Island No No N/A, South Carolina No No N/A, South Dakota No No N/A, Tennessee No No N/A, Texas No No N/A, Utah Yes No No % of wholesale price, Vermont Yes No No % of wholesale price, Virginia Yes No Yes Unit, Washington Yes No No Unit(different rates for open vs. closed), West Virginia Yes No No Unit, Wisconsin Yes No No Unit, Wyoming Yes No Yes % of wholesale price.
It’s long been illegal to ship cigarettes and smokeless tobacco products through the U.S. Postal Service (USPS). The amended PACT Act extended that ban to vapes and other ENDS effective April 26, 2021. Note that an item doesn’t need to deliver nicotine to qualify as an ENDS; per the Federal Register, “liquids that do not actually contain nicotine can still qualify as ENDS, as can devices, parts, components, and accessories capable of or intended for use with non-nicotine-containing liquids.” Federal Express (FedEx) and United Parcel Service (UPS) also prohibit the shipping of e-cigarettes and vaporizers. In fact, FedEx won’t ship any tobacco or tobacco products. UPS permits tobacco product shipments only from shippers licensed and authorized to ship tobacco products. However, there are some carriers still willing to ship vape products to consumers. Interestingly, Georgia lawmakers considered a bill that would allow out-of-state licensed manufacturers to sell vape products directly to consumers, provided the orders are made by mail, email, electronic means, or telephone (or similar voice transmission) and shipped to the consumer by common carrier, private delivery service, or “other method of remote delivery.” The measure died.
Tobacco and vape tax automation can help you untangle vapor product taxes and help you stay compliant no matter what, where, or how you sell.
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