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Everything You Need to Know About Your State’s OTP/ Nicotine Eliquid Taxes

Everything You Need to Know About Your State’s OTP/ Nicotine Eliquid Taxes

In the US, taxes on vape products and e-cigarettes are really a complex thing to understand. Before delving deep into this matter, let’s look back at the past to learn the taxation even better.

In 2015, Three states and the District of Columbia had taxes on vaping products.(Source). The number of states imposing the laws or taxes on vaping products has then increased significantly.

Vaping product sellers are experiencing a dramatic change in their business. Earlier, the sellers dealt with the taxes of states as per their location. However, the scenario has completely changed now. When a retailer has a business across a state line, the business has to handle different levels of excise taxation.

For vape products, companies have to abide by different federal restrictions. However, there is no federal level tax applied on vaping products in the United States. (Source) So, vape product sellers only take care of the state excise taxes for selling their products.

Those who sell vape products online also experience many complexities. They must follow the laws, regulations, and taxes of each state where they have customers.

As of February 2022, the states that do not have any vape taxes are:

Alabama, Arizona, Arkansas, Florida, Hawaii, Idaho, Iowa, Michigan, Mississippi, Missouri, Montana, Nebraska, Oklahoma, Rhode Island, South Carolina, South Dakota, Tennessee, and Texas.

All other states in the US have vape tax. However, the level of tax is different in each state. While some collect as big as 60% or more tax on manufacture price or wholesale purchase price, some states keep it as low as 15% on manufacture price.

Current Rules For Tax Collection:

As of now, two rules are there for calculating excise tax on vape products, as a percentage of the sales price or as a volumetric tax either per unit (vape pens and cartridges) or per milliliter (vape juice).

Some states have used both types of tax calculations. For example, Illinois charges a 15% excise tax on the wholesale purchase price for all types of vape products. Whereas, Connecticut, Georgia, and Kentucky taxed some products as per the volumetric tax and some as a percentage of the wholesale purchase price.

Maryland has different excise tax rates for different products, and it is one of the eight states that follow the same rule for taxation. In Maryland, the tax rate is 60% on the retail price for the 5ml or less quantity and the rest comes under the 12% on the retail price.

The states that levy excise tax on the percentage of the sale price also shows significant differences in the tax rates. For example, Minnesota has a 95% tax on the sale price and Vermont has 92%. Whereas, New Hampshire has levied the 8% excise tax on the wholesale price, which is the lowest among all states.

Indiana is now a taxed state starting from July 1st, 2022, and the state levied a 15% tax rate on the manufacturing price on closed containers at the time of purchase, along with an additional 15% on the manufacturing price/wholesale purchase price on retail open.

The states that imposed tax rates per milliliter basis also show a huge difference in rates. For example, the states like Delaware, Kansas, Wisconsin, and North Carolina charged 5 cents per milliliter. On the other hand, Connecticut collects 40 cents per milliliter on closed containers.

Here are The Complete TAX Details: