The federal tax on cigarettes is $1.01 per pack of 20. That rate has not moved since April 1, 2009, when the Children’s Health Insurance Program Reauthorization Act nearly tripled it from $0.39 to fund CHIP.1Congress.gov. Children’s Health Insurance Program Reauthorization Act of 2009 Because Congress set the rate by statute and did not index it to inflation, its real value has eroded by roughly a third since then.
How the Rate Is Actually Set
The $1.01 figure is a conversion. Federal law taxes cigarettes per thousand units, not per pack. Standard small cigarettes, meaning those weighing no more than three pounds per thousand, are taxed at $50.33 per thousand, which comes out to $1.01 for a 20-count pack.2Office of the Law Revision Counsel. 26 USC 5701 – Rate of Tax
Two variations push the number higher. Oversized cigarettes weighing more than three pounds per thousand are taxed at $105.69 per thousand, or about $2.11 per pack. And a cigarette longer than 6½ inches is taxed as a separate cigarette for every 2¾-inch segment, so an extra-long stick can count as two or three cigarettes for tax purposes.3Alcohol and Tobacco Tax and Trade Bureau. Tax Rates
The rate is uniform across all 50 states. It does not vary by brand, nicotine content, or where the product is sold.
Who Actually Pays the Tax
Consumers never remit this tax directly. The legal obligation falls on the manufacturer or importer, who owes the tax the moment tobacco products are removed from the factory or released from customs.4Office of the Law Revision Counsel. 26 US Code 5703 – Liability for Tax and Method of Payment The cost is built into the wholesale price, so retailers and ultimately buyers absorb it without a separate line item at the register.
The Alcohol and Tobacco Tax and Trade Bureau, a division of the Treasury Department, administers and collects the tax.5Alcohol and Tobacco Tax and Trade Bureau. Statutory Authorities and Responsibilities
State Taxes Stack on Top
The $1.01 is only the federal share. Every state adds its own excise tax, and the spread is wide. As of mid-2024, state cigarette excise taxes ran from $0.17 per pack at the low end to $5.35 per pack at the high end.6Centers for Disease Control and Prevention. STATE System Excise Tax Fact Sheet Many cities and counties layer local taxes on top of that. In high-tax jurisdictions, combined federal, state, and local taxes can account for well over half the retail price.
Because the federal rate has held flat since 2009 while many states have raised theirs repeatedly, state taxes now make up a much larger share of the total tax burden on a pack than they did 15 years ago.
What the Federal Tax Does Not Cover
There is no federal excise tax on e-cigarettes or vaping products. Chapter 52 of the Internal Revenue Code only reaches products made from the tobacco plant itself, and Congress has not extended that framework to vapor products, nicotine pouches, or e-liquids despite repeated proposals. A number of states have filled the gap with their own vaping taxes, but the federal rate for these products remains zero.
Other tobacco products carry their own federal rates. Small cigars are taxed at the same $50.33 per thousand as cigarettes. Large cigars are taxed at 52.75 percent of the manufacturer’s or importer’s sale price, capped at 40.26 cents per cigar. Roll-your-own tobacco runs $24.78 per pound, nearly nine times the $2.8311 per pound rate on pipe tobacco, because roll-your-own is a direct substitute for factory-made cigarettes.2Office of the Law Revision Counsel. 26 USC 5701 – Rate of Tax
Penalties for Evasion
The penalties for dodging the tax or breaking the rules around manufacturing, importing, and recordkeeping escalate sharply depending on intent.
Civil Penalties
A willful failure to follow any requirement of Chapter 52 carries a civil penalty of $1,000 per violation. Late payment of the excise tax adds a penalty of 5 percent of the unpaid amount. Selling or receiving tobacco products that were labeled for export and brought back into the country draws the harshest civil penalty: the greater of $1,000 or five times the tax owed.7GovInfo. 26 USC 5761 – Civil Penalties
Criminal Penalties
Fraudulent conduct is a felony. Attempting to evade or defeat the tobacco tax, operating as a manufacturer or importer without the required permit, keeping false records, or unlawfully removing tobacco products from bonded premises can bring a fine of up to $10,000, up to five years in prison, or both, for each offense.8Office of the Law Revision Counsel. 26 US Code 5762 – Criminal Penalties Other violations of Chapter 52 that fall short of fraud carry a maximum fine of $1,000, up to one year in prison, or both.