This bill proposes an increase in taxes on cigarettes and electronic cigarettes, raising the tax on a package of 20 cigarettes from $1.78 to $2.78. Additionally, it modifies the tax structure for electronic cigarettes, imposing a tax of 65% of the wholesale sales price for both closed cartridges and open containers of liquid containing nicotine, replacing the previous rates of $0.30 per milliliter and 8% of the wholesale price, respectively. The bill also establishes a committee tasked with studying taxes on tobacco and other nicotine products, which will consist of three members from the House of Representatives and one member from the Senate, with members receiving mileage compensation for their duties.

The committee is required to report its findings and any legislative recommendations by November 1, 2025. The tax changes are expected to generate indeterminable revenue increases for the General Fund and the Education Trust Fund starting in FY 2026, with estimates suggesting a significant rise in revenue due to the increased tax rates. The Department of Revenue Administration will implement the necessary updates to tax return forms and systems to accommodate these changes without additional budgetary needs.

Statutes affected:
Introduced: 78:2