State Vape Taxes: Get Ready to Pay Dearly - Kai's Virgin Vapor, A Private Vape Club

State Vape Taxes: Get Ready to Pay Dearly

March 09, 2021

One of the many provisions of the PACT Act is wording that requires all vape companies to register with every U.S. state where they do business and to charge customers excise taxes, better known as tobacco taxes.

In some states, these taxes will amount to a budget busting increase in the monthly cost of vaping.

State Vaping Taxes

Please note: taxes will be charged based on where you are located not based on where we ship from so you can determine taxes you may be subject to by looking at your home state in the map above.

As you can see, Minnesota charges a whopping 95% tax on the wholesale price of vape products. Vermont charges 92% and Washington D.C. isn't far behind at 91%. Massachusetts, Oregon, California, Alaska and Utah all charge between 55 and 75%. Nevada, Maine, Colorado and Pennsylvania seem like a relative bargain with tax rates hovering between 30 and 43%.

Keep in mind, these excise taxes are IN ADDITION to state sales taxes and some states even charge sales tax on the amount you pay in excise tax (tax on tax)!

Each State Taxes Vapor Products Differently

You'll also notice that every state has a different metric by which they tax vaping.  Some states charge a percentage based on the wholesale price, others, such as New York, tax based on the retail price (20% tax on the retail price in New York!). Some states charge per milliliter of vape juice or by cartridge, some states tax zero nicotine vape liquids while others exempt nicotine-free products and only charge tax on e-juice that contains nicotine.

The lack of a uniform metric is one of the many things that makes compliance with the PACT Act so crushingly difficult for small businesses. Most vape companies will have to hire a full time individual going forward just to figure out how to charge for, collect, report and remit all these taxes.

If Your State Doesn't Tax, It Will Soon

For some lucky vapers, if your home state has not yet implemented excise taxes the cost increase will be minimal or non-existent. However, I emphasize the word "yet." Every consultant that we have spoken to has told us to expect things to change very quickly.

Seeing dollar signs, states are warming up their legislative typewriters and preparing to tax the heck out of vaper products as fast as they can. Other states already charge vapor taxes but are preparing to ramp them up as fast as they can.

Case in point: Colorado. The state just added a 30% tax on the wholesale price of vapor products on January 1st, 2021, but they're already planning to increase that to 35% in 2022, 50% in 2023, 56% in 2024 and a whopping 62% by 2027.

Taxing "Modified Risk" Tobacco Products

Colorado taxes vapor products that are given a "Modified Risk" designation by the FDA at 50% less than their standard vapor products tax. "Modified risk" is a particular classification from the FDA that has to be specifically applied for. 

For example, the Philip Morris's product the IQOS is a "heat not burn" tobacco product that features a plug of tobacco that gets heated in a specialized device rather than burned like a cigarette. Philip Morris applied for and received a modified risk designation from the FDA because, when compared side by side with smoking a cigarette, the IQOS contains fewer toxins and carcinogens.

However, most vapor products, when compared side by side with the IQOS, put the IQOS to shame yet, unless vapor companies have the deep pockets of Philip Morris, they are unlikely to be able to afford to get the "modified risk" designation. That means we may end up in a situation where Big Tobacco's IQOS product will be taxed at half the rate of vapor products while containing more toxic chemicals.

If modified risk products are better for smokers than cigarettes, the real question is why Colorado is taxing them at all. Wouldn't the state want to do all it can to encourage people to switch to a lower risk product? Apparently not if the state has to lose a few dollars in taxes it could otherwise collect.

Get Involved in Vape Advocacy Now

If you've been shocked by the impact of the FDA's PMTA, the state level flavor bans and now the PACT Act on your vaping rights, hopefully you realize that now is the time to get active in vape advocacy.

We cannot take our rights for granted. Unfortunately, legislators are eager to take our rights and choices away and we must actively fight to keep them. Vaping steps on the toes of both Big Tobacco and Big Pharma (don't underestimate the billions at stake for nicotine replacement therapies) and readers of this blog are well aware of the power of money to speak and to get legislators to listen.

We hope you will join us in getting your voice hear by supporting some of the organizations fighting for your right to vape such as CASAA and the American Vaping Association.

In particular, submit your comments on the PACT Act with both your legislators and to the USPS. CASAA has made it easy to do both by filling out the form here.

Also in Kai's Virgin Vapor Blog

Kai's Virgin Vapor | Organic Delta-8-9-10-THC Vape Juice

November 08, 2022

Continue Reading

Bundle & Save SALE

November 12, 2021

We're offering our "Bundle & Save" promo to help you save while also getting you free shipping!

Continue Reading

We're Back: Now Shipping After Vape Mail Ban

October 29, 2021

We've managed to survive the vape mail ban against all odds!

Continue Reading