New York State Raises Tax Rate on Cigars

New York State Raises Tax Rate on Cigars

Tobacconists in the state of New York are now facing a higher cost associated with doing business.

The New York Department of Tax has revised the definition of wholesale price, paving the way for higher taxes on tobacco products. On the New York State Department of Taxation and Finance website, the wholesale price definition change is described as follows:

“The tobacco products definition of wholesale price has been revised to be the price for which the tobacco products are sold to a distributor, before the allowance of any discount, trade allowance, rebate or other reduction, and including the federal excise taxes paid by the seller. The invoice received by a distributor for its purchase of a tobacco product is presumptive evidence of the wholesale price of the tobacco product.

“This definition applies to all tobacco products possessed in this state for sale on or after October 1, 2020. No floor tax is due on inventory acquired before October 1, 2020.”

With that change, here are the current New York State excise tax rates for tobacco products:

  • 75 percent of the wholesale price on cigars and tobacco products (other than little cigars and snuff);
  • $4.35 per 20 little cigars;
  • $2 per container of snuff with one ounce or less; and
  • $2 per ounce of snuff and a proportionate rate on any fractional amount for containers with more than one ounce (for example, the tax on a 1.25 oz. container would be $2.50).

Previous to the wholesale price definition change, the wholesale price on cigars was 28.5 percent. With the new rate going up to 75 percent, cigars in particular will be greatly impacted with those retailers who sell the product–and consumers–forced to pay the price. New York now has the second highest tax rate in the U.S. for cigars, with Alaska also having a 75 percent excise tax on the sale of tobacco products.

For more information on tobacco taxes in the state of New York, click here.