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Minnesota: Tax Hike for Cigarettes and Tobacco


 Minnesota smokers may not be happy about the July 2013 cigarette tax increase.

Smokers in Minnesota may want to stock up on supplies during the next couple of weeks. On July 1, 2013, the state excise tax on cigarettes and tobacco products will increase to $2.83 per pack.

Cigarettes

Effective July 1, the total Minnesota tax on a 20-pack of standard cigarettes (weighing less than 3 pounds per 1,000 cigarettes) will be:

  • $3.323 for brands that have a legal settlement with the state.
  • $3.823 for non-settlement brands.

Both of the above amounts include the increased excise tax and a $0.493 per pack sales tax. Smokers who prefer cigarettes made by companies that have not reached a settlement with the state are required to pay an extra $0.50 non-settlement fee per pack.

As of July 1, cigarette is defined as "any roll for smoking made wholly or in part of tobacco, that weights 4.5 pounds or less per thousand." Little cigars are taxed as cigarettes.

Other Tobacco Products

Effective July 1, most other tobacco products in Minnesota will be charged an excise tax that is 95% of the "wholesale sales price." For example, the excise tax on premium cigars will be "$3.50 per cigar or 95% of the wholesale price, whichever is less." (Emphasis mine).

Floor Stocks Tax

Because of the increase, all cigarette distributers, retailers and subjobbers are required to pay "a one-time floor stocks tax on existing inventory." That rate is:

  • $1.731 per 20-count pack of cigarettes; and
  • $2.16375 per 25-count pack of cigarettes.

Looking Ahead

January 1, 2014 will bring yet more changes:

  • Moist snuff: "The excise tax on moist snuff will become $2.83 per container or 95 percent of the wholesale sales price, whichever is greater. Moist snuff will be taxed at 95 percent of the wholesale sales price through December 31, 2013.
  • The definition of wholesale sales price, with respect to tax:  "The price a distributor pays for a tobacco product plus any applicable federal excise tax, freight charges, or packaging costs (if they were not included in the purchase price)."

How do you keep track of tax rate changes around the country? Automation can help.

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Minnesota State Rates

photo credit: mendhak via photopin cc


Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.