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.
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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.
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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.
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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
Alaska doesn’t have a state tax, but 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 a 55% wholesale tax
- 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, 2022, the tax is 61.74% of the wholesale cost for all nicotine-containing products.
On July 1, 2022, California added 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 began in 2021 at 30% of manufacturer’s list price, and escalated to 35% on Jan. 1, 2022. It will increase to 50% in 2023, 56% in 2024, and finally to 62% in 2027. The tax is 50% lower for products given a Modified Risk (MRTP) designation by the FDA (but no liquid-based vaping product has even applied for an MRTP authorization)
Connecticut
The state has a two-tiered tax on nicotine-containing vape products: $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 91% 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. The taxes apply to products with and without nicotine
Illinois
A 15% wholesale tax on all vaping products. The tax applies to products with and without nicotine. 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
A 15% tax on retail gross on all vaping product sales, with or without nicotine
Kansas
A $0.05 per milliliter tax on all e-liquid. The tax applies to products with and 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. The taxes apply to products with and without nicotine
Louisiana
A $0.05 per milliliter tax on nicotine-containing e-liquid
Maine
A 43% wholesale tax on all vaping products. The tax applies to products with and without nicotine
Maryland
A 6% retail tax on all open-system vaping products (including nicotine-containing e-liquid) and a 60% tax on nicotine-containing 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 tax applies to products with and without nicotine. 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. The tax applies to products with and without nicotine
New Hampshire
An 8% wholesale tax on open-system vaping products (including nicotine-containing e-liquid), and $0.30 per milliliter on closed-system products (pods, cartridges, cigalikes)
New Jersey
New Jersey taxes nicotine-containing 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 e-liquid, and $0.50 on each pod, cartridge, or cigalike with a capacity under 5 milliliters. The taxes apply to products with and without nicotinee
New York
A 20% retail tax on all vapor products. The tax applies to products with and without nicotine
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 non-cannabis “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. The tax applies to products with and without nicotine
Pennsylvania
A 40% wholesale tax on e-liquid and devices that are sold with e-liquid included. The tax applies to products with and without nicotine
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. The tax applies to products with and without nicotine
Vermont
A 92% wholesale tax on e-liquid and devices—the highest tax imposed by any state. The tax applies to products with and without nicotine
Virginia
A $0.066 per milliliter tax on nicotine-containing e-liquid
Washington State
A two-tiered tax charges $0.27 per milliliter on e-juice in pods and cartridges smaller than 5 mL in size, and $0.09 per milliliter on liquid in containers larger than 5 mL. The taxes apply to products with and without nicotine
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West Virginia
A $0.075 per milliliter tax on all e-liquid. The tax applies to products with and without nicotine
Wisconsin
A $0.05 per milliliter tax on e-liquid in closed-system products (pods, cartridges, cigalikes) only. The tax applies to products with and without nicotine
Wyoming
A 15% wholesale tax on all vapor devices and nicotine-containing e-liquid
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
Costa Rica
A 20% wholesale tax on all vaping products and accessories
Croatia
Although Croatia has an e-liquid tax on the books, it is currently set at zero
Cyprus
A €0.12 per milliliter tax on all e-liquid
Denmark
A DKK 2.00 ($0.30 US) per milliliter tax on all e-liquid
Ecuador
A 150% wholesale tax on “other tobacco products” includes vaping products
Estonia
In 2018, Estonia imposed a €0.20 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 per milliliter tax on all e-liquid
Georgia
A tax of 0.2 Georgian Lari ($0.066 US) on all e-liquid
Germany
A €0.16 per milliliter tax on all e-liquid. The tax will increase in steps until it reaches €0.32/mL in 2026
Greece
A €0.10 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
Israel
In January 2022, the Knesset (parliament) Finance Committee approved a modified version of the tax imposed in November 2021 by the Ministry of Finance. All vaping products are subject to a 270% wholesale tax and 8.16 NIS per milliliter tax on e-liquid. The minimum total tax must equal 15.6 NIS/mL. The tax is effective immediately
Italy
Taxe rates of about €0.13 per milliliter for nicotine-containing e-liquid, and €0.08 ($0.10 US) for zero-nicotine products are set to remain in effect through 2022
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 per milliliter tax, and an additional tax (€0.005 per milligram) on the weight of the nicotine used
Lithuania
A €0.12 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. (In early 2022, this tax was postponed)
Maldives
Nicotine-containing e-liquid is taxed at a rate of 200% of the CIF (cost, insurance and freight) value
Montenegro
A €0.90 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 allows automatic increases in the tax rate July 1 of each year from 2020 to 2023
Norway
A 4.5 Norwegian Krone ($0.51 US) per milliliter tax on nicotine-containing vaping products
Palau
Nicotine-containing e-liquid is taxed as loose tobacco at a rate of $294.12 (US) per 17 grams
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 tax of 37 Philippine pesos (PHP) per milliliter for nicotine salt-based e-liquids, and 45 PHP per mL for freebase nicotine e-liquids. For both, the tax will increase by 5 pesos/mL each year until until 2023. From 2024 onward, the tax will increase by 5% each year
Poland
A 0.55 Polish Zloty (PLN) ($0.14 US) per milliliter tax on all e-liquid
Portugal
A €0.323 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 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 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 Swedish krona (SEK) per milliliter ($0.22 US) tax on nicotine-containing e-liquid up to 15 mg/mL. E-liquid containing 15-20 mg/mL is taxed at 4 SEK/mL
Togo
Taxed up to 45% (believed to be based on the wholesale price)
Ukraine
A 3 Ukrainian hryvnia (UAH) ($0.11 US) tax per milliliter tax on all e-liquid
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
Uzbekistan
Global Tobacco Control says an excise tax of 500 Uzbekistani so’m per milliliter ($0.05 US) was introduced on e-liquid in 2020, but we could find no confirmation or additional details
