State Tobacco-Related Legislative Updates From NATO

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Every year, themes emerge with tobacco and nicotine state legislation. After many years of relative quiet, there has been an uptick in the number of states, more than 30, considering tobacco and nicotine excise taxes in 2025.

Some key drivers fueling this trend include:

• Legislators are more apt to consider tax increases in odd-numbered years after statewide elections. The conventional thinking is that when elections come around again in November 2026, voters might not have tax increases passed over a year ago top of mind when they cast their vote.
• All 50 states are holding a legislative session in 2025 and almost all of them need to pass a statewide budget. The recent economic uncertainty has put pressure on states to find additional revenue to fund state services.
• The length of time since states increased tobacco and nicotine taxes. In many states, it has been over 10 years since tobacco tax rates were raised.  For example, in Indiana the last cigarette tax increase was in 2007. This and a severe budget deficit were the driving factors when Indiana legislators passed a budget in April that increased the state’s cigarette tax by $2.
• States are considering how to tax new nicotine products. Currently, about half the states tax vapor products and approximately only 10 states tax nicotine pouches. Due to commercial success of these categories, states are asking 2 main questions—the methodology on how to tax these products and the rate of taxation. Generally, state bill proposals either include lower rates that recognize the potential tobacco harm reduction qualities of vapor products and nicotine pouches or measures that try to  equalize the tax on these products to that on cigarettes.

This year, governors in Ohio, Michigan, New Jersey, Rhode Island, Massachusetts and Maine included tobacco tax increases in their state budget proposals. Legislatures in Indiana (all tobacco products), Hawaii (cigarette tax), Tennessee (vapor products), Nebraska and Washington (nicotine pouches) have already passed excise tax increases. Proposals have failed in Georgia, Idaho, Mississippi, Montana, New Mexico, North Dakota, South Dakota, Utah, Virginia and West Virginia. 

The remaining 20 states with excise tax proposals will likely be decided by the end of June when most states will have adjourned their legislative sessions and enacted a state budget in time for the start of their fiscal year. Industry stakeholders have continuously engaged with state legislators on the unintended consequences of increasing tobacco and nicotine taxes.

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