Nicotine products are now subject to the tobacco products tax

Intended audience: Retailers and distributors of vapor products, nicotine products, and tobacco products. 

Effective Jan. 1, 2026, any product that contains nicotine, whether it comes from tobacco or is made synthetically, is subject to the tobacco products tax. Before this change, some nicotine products were subject to the vapor products tax. 

What products are taxed? 

The tobacco products tax applies to any product that contains tobacco or nicotine, whether derived from tobacco or synthetically made. Examples include: 

• Cigars. 
• Pipe tobacco. 
• Chewing tobacco. 
• E-cigarettes. 
• Synthetic nicotine pouches. 
• Nicotine vapor products. 
• Any other products containing tobacco or nicotine regardless of form. 

Newly taxed products include:  

• Synthetic nicotine pouches (these were previously not taxed under either tax).  
• Disposable vapor products containing nicotine.
• Vapor liquids that contain nicotine. 

Note: “Tobacco products” do not include: 

• Cigarettes. (These are subject to cigarette tax.)
• A drug, device, or combination product approved for sale (as of Dec. 31, 2024) by the United States Food and Drug Administration, as defined in the federal food, drug, and cosmetic act (21 U.S.C. Sec. 301 et seq.) as it exists on Jan. 1, 2026.  

How to report tobacco products tax on existing inventory of nicotine products 

The tobacco products tax is based on the taxable sales price of nicotine products.  

Retailers and distributors must report the value of their existing inventory of nicotine products on the first return due after Jan. 1, 2026.  

A one-time line is added to the return: “Pre-existing inventories of nicotine products as of January 1, 2026”.  

How to determine the selling price 

• If the nicotine product was purchased from a non-affiliated seller, use the purchase price.  
• If the retailer or distributor is affiliated with the manufacturer or distributor, use the actual selling price of the product. 

What is the difference between the tobacco products tax and the vapor products tax? 

• The vapor products tax is based on the volume of the solution and type of container.  
• The tobacco products tax is based on the value of the product in its original package or container.  

When calculating the tobacco products tax on vapor nicotine products, use the selling price, not the volume.  

For current tax rates, visit the Vapor Products Tax and Tobacco Products Tax webpages. 

Litter tax 

The litter tax applies to the sale of all tobacco products.  

Vapor products are not subject to the litter tax. However, vapor products that contain nicotine will now be subject to the litter tax. 

Is there any credit for previously paid vapor products tax? 

No, a credit is not provided for taxes paid on vapor products that are now subject to the tobacco products tax. Sellers of nicotine products will owe the tobacco products tax on their existing inventory of vapor products that include nicotine.  

Business license requirements 

Businesses that sell tobacco products are required to obtain a tobacco endorsement for each location at which tobacco products are sold. Tobacco products retailers may add endorsements to their business license through their MyDOR account.