Which Tobacco Product Is Exempt from Pennsylvania’s New Tax?

New budget includes tax increases on cigarettes, electronic cigarettes and OTP

HARRISBURG, Pa. -- Pennsylvania Gov. Tom Wolf signed a $1.3 billion revenue bill that will complete next year’s state budget and increase the tax rate on a number of tobacco products.

cigarette tax

Signed July 13, 2016, House Bill 1198 will increase the state’s cigarette tax by $1 per pack, assess a new 55-cents-per-ounce tax on other tobacco products (excluding cigars) and impose a new tax on electronic cigarettes and e-liquids of 40% of the purchase price charged to retailers, according to NATO.

In addition, the new law will impose a floor-stocks tax on wholesalers and retailers that have in inventory cigarettes, tobacco products (excluding cigars), electronic cigarettes and e-liquids. This floor-stocks tax mirrors the new excise taxes passed: $1 per pack of cigarettes, 55 cents per ounce on OTP products (minus cigars) and 40% of the purchase price of electronic cigarettes and e-liquids.

The new cigarette tax will go into effect Aug. 1, 2016, and the retail/wholesale floor tax must be reported and paid within 90 days of this date. The OTP and electronic cigarette/vapor taxes won’t go into effect until Oct. 1, 2016, with another 90-day deadline for the floor-stocks tax to be reported and paid.

The Pennsylvania Department of Revenue confirmed to NATO that information about the new cigarette and OTP tax rates will be posted on the agency’s website early next week, including the necessary forms needed to report and file the floor-stocks tax. Retailers will also receive a mailing from the Department of Revenue regarding the floor-stocks-tax requirement.

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