Cigar tax by state runs from zero in Florida, Pennsylvania, and New Hampshire to 95 percent of the wholesale price in Minnesota and Washington, with most states landing somewhere in between and many capping the tax on premium cigars at anywhere from 30 cents to a few dollars per stick. Two things decide what you actually pay: the rate structure your state uses, and whether that state puts a ceiling on the tax for handmade premium cigars. A $10 cigar can carry $7 of state excise tax in one state and none at all a border away.
Federal excise tax applies everywhere on top of the state layer. Large cigars are taxed at 52.75 percent of the manufacturer’s or importer’s selling price, capped at 40.26 cents per cigar. Small cigars are taxed at a flat $50.33 per thousand.1Office of the Law Revision Counsel. 26 USC 5701 – Rate of Tax Those rates have held since 2009 and are the same in every state, so the shopping difference between states comes entirely from state law.
States With No Cigar Excise Tax
Florida, Pennsylvania, and New Hampshire are the cheapest states for cigars on the excise side.2Tax Foundation. Premium Cigar Taxes by State, 2024
Florida charges no state excise tax on cigars of any kind, a policy tied to the state’s long history of cigar manufacturing around Tampa. Pennsylvania’s Department of Revenue excludes cigars from its “other tobacco products” category, though little cigars are taxed as cigarettes at $0.13 per stick.3Pennsylvania Department of Revenue. Tobacco Products Taxes New Hampshire exempts premium cigars entirely while taxing other tobacco products at 65.03 percent of wholesale.4New Hampshire General Court. New Hampshire Revised Statutes 78:2 – Tax Imposed
You still pay regular state and local sales tax in these states, and the federal excise tax is baked into what the retailer paid the distributor. But a $10 cigar rings up close to $10 rather than close to $17.
States With the Highest Cigar Tax Rates
At the expensive end, several states apply ad valorem rates that come close to doubling the wholesale cost before any cap. Minnesota and Washington both tax cigars at 95 percent of wholesale. Vermont sits at 92 percent. Utah applies 86 percent of the manufacturer’s sales price.5Utah State Tax Commission. Pub 65 Rhode Island rounds out the top five at 80 percent.
In dollar terms, a cigar with a $5 wholesale cost carries $4.30 of state excise tax in Utah and $4.75 in Minnesota, before retail markup or sales tax. On a $15 wholesale cigar in Minnesota, the 95 percent rate would generate $14.25 of tax if nothing capped it. That is where premium-cigar caps come in.
Tax Caps on Premium Cigars
A cap sets a maximum dollar amount of excise tax on a single cigar, no matter what the percentage rate would otherwise produce. At least 17 states use some form of cap, and the ceiling varies quite a bit:
- $0.30 per cigar in North Carolina (12.8 percent rate)
- $0.35 per cigar in Montana (50 percent rate)
- $0.50 per cigar in Connecticut, Idaho, Iowa, Michigan, Minnesota, Nevada, New Mexico, Rhode Island, and Wisconsin
- $0.65 per cigar in Ohio and Washington
- $1.00 per cigar in Oregon (65 percent rate)
- Up to $4.00 per cigar in Vermont, where the cap is $2.00 for most premium cigars but rises to $4.00 when the wholesale cost exceeds $10
Ohio’s cap illustrates how the mechanism can move. The base statutory cap is $0.50, but the Tax Commissioner computes an annual inflation adjustment; as of July 2025 the effective cap is $0.65 per cigar.6Ohio Department of Taxation. Excise and Energy Tax Division, OTP Premium Cigar – Maximum Tax
The practical effect in high-rate states is dramatic. That $15 wholesale cigar in Minnesota, which would generate $14.25 in tax at 95 percent uncapped, generates $0.50 in tax with the cap applied. For anyone smoking premium sticks in a high-rate state, the cap is doing most of the work.
Maryland uses a different structure that gets to a similar place. Regular cigars are taxed at 70 percent of wholesale, but premium cigars are taxed at 15 percent.7Maryland General Assembly. Maryland Tax – General Code 12-105 – Tax Rates On a $15 wholesale cigar, that is $2.25 instead of $10.50. The tax still rises with price rather than hitting a flat ceiling, but the reduction for premium product is comparable.
How to Read Your State’s Rate
State cigar taxes fall into three basic structures. Knowing which one your state uses tells you how the tax scales with the cigar’s price.
Ad valorem is the most common. The state sets a percentage of the wholesale price, and the tax rises and falls with what the distributor paid. A $2 wholesale cigar taxed at 50 percent generates $1 in tax; a $10 cigar at the same rate generates $5. This structure hits premium product hardest, which is why so many ad valorem states pair it with a per-cigar cap.
Specific taxes charge a flat dollar amount per cigar regardless of price. Arizona uses this approach. Revenue is more predictable and premium cigars aren’t penalized, but a cheap machine-made cigar carries the same tax as a handmade one.
Hybrid approaches apply a percentage rate but cap the tax at a set dollar amount per premium cigar once the percentage exceeds that ceiling. This is effectively an ad valorem tax with the cap built in, and it’s the structure most high-rate states have moved toward.
In every state, the distributor or wholesaler is legally responsible for remitting excise tax to the state revenue department. The tax gets folded into the wholesale price before the retailer ever touches the product, so you rarely see it broken out on your receipt the way sales tax is. The shelf price already includes it.
What Counts as a Premium Cigar
Because caps and reduced rates apply only to premium cigars, states need a legal definition. Criteria vary, but the common threads are that the cigar must be handmade and wrapped in whole tobacco leaf rather than homogenized sheet tobacco. Some states add a price floor. Louisiana’s premium cigar cap, effective January 1, 2026, applies only to handmade cigars invoiced by the manufacturer at $2,500 or more per thousand, which works out to at least $2.50 per cigar at wholesale.
If you smoke inexpensive machine-made cigars or filtered little cigars, the premium definition usually won’t cover you, and you’ll pay the full ad valorem rate. In states like Pennsylvania, little cigars are taxed as cigarettes and fall outside the cigar exemption entirely.
Buying Cigars Online From a Lower-Tax State
The tax gap between states pushes a lot of buyers toward online retailers. Cigars can still be shipped through the U.S. Postal Service; the Prevent All Cigarette Trafficking Act, which bans mailing cigarettes and smokeless tobacco through USPS, explicitly exempts cigars.8United States Postal Service. Field Information Kit: PACT Act Private carriers set their own rules: UPS accepts tobacco shipments from authorized shippers, and FedEx refuses tobacco regardless of the shipper’s licenses.9U.S. Customs and Border Protection. Mailing Tobacco Products to the United States Through the Postal Service and Other Carrier Services
The tax picture is less forgiving than the shipping picture suggests. When you buy from an out-of-state retailer that does not collect your state’s excise or sales tax, you generally owe use tax to your home state. Many states now require remote cigar sellers to license with the state and collect the destination tax directly. Colorado, for example, treats any out-of-state seller accepting orders from Colorado consumers as a “remote retail seller” who must hold a state tobacco products license, file quarterly returns, and remit the applicable tax.10Colorado Department of Revenue. Tobacco Products Tax Guide
When the seller doesn’t collect, the obligation shifts to you. Most states let you report use tax on your annual income tax return. Compliance on personal cigar purchases is low, but it isn’t optional, and high-rate states have growing reason to enforce it.