March 30, 2017
Changes Coming for Taxes on Cigarettes and Electronic Vaping Devices
Sacramento – California voters approved Proposition 56, which increased the excise tax rate on cigarettes and expanded the definition of "tobacco products" to include any type of tobacco, nicotine, little cigars, and electronic cigarettes sold in combination with nicotine.
On April 1, 2017, the cigarette tax rate will increase from $0.87 to $2.87 per pack of 20 cigarettes. In addition, the distribution of nicotine delivery devices – including, but not limited to, electronic cigarettes, e-cigars, e-pipes, vape pens, and e-hookahs – sold in combination with substances containing nicotine will be subject to the current tobacco products tax rate of 27.30 percent of the wholesale cost of the product.
Nicotine delivery devices sold independently and not in combination with any liquid or substance containing nicotine are not subject to excise tax. This includes any battery, battery charger, carrying case, or any other accessory used in the operation of a nicotine delivery device.
Any product approved by the U. S. Food and Drug Administration as a tobacco cessation product or other therapeutic purpose when that product is marketed and sold for such approved use (for instance, nicotine patches) will also not be subject to the excise tax.
Additional information regarding the provisions of Proposition 56 is available online. You may also view the BOE's online Cigarette and Tobacco Products Tax Guide, or watch our video, How new laws affect cigarette and tobacco products.
The five-member California State Board of Equalization (BOE) is a publicly elected tax board. The BOE collects $60.5 billion annually in taxes and fees supporting state and local government services. It hears business tax appeals, acts as the appellate body for franchise and personal income tax appeals, and serves a significant role in the assessment and administration of property taxes. For more information on other taxes and fees, visit the California Tax Service Center.
Note: This news release may discuss complex tax laws and concepts. It may not address every situation, and is not considered written advice under Revenue and Taxation Code section 6596. Changes in law or regulations may have occurred since the time this news release was written. If there is a conflict between the text of this news release and the law, decisions will be based upon the law and not this news release. For specific help, please contact the BOE at 1-800-400-7115.