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Washington DC: Tobacco Tax


 Not an "other tobacco product."

The District of Columbia will increase its cigarette excise tax rate and change how it taxes other tobacco products beginning October 1, 2014.

DC imposes both a fixed rate of tax and a variable rate on cigarettes. The fixed rate is $2.50 per pack and the variable rate is currently $0.36. Come October 1, the variable rate will increase to $0.40, and the combined cigarette excise tax will jump to $2.90 per 20 cigarettes.

Other tobacco products

Also effective October 1, 2014, other tobacco products will be exempt from the District of Columbia’s 5.75% sales tax and the 12% sales tax on other tobacco products. Other tobacco products are:

  • Products containing, made from, or derived from tobacco.
  • Products intended for consumption.

Other tobacco products are NOT cigarettes or premium cigars, and premium cigars “remain subject to the District’s 5.75% general sales tax when sold at retail.” Likewise, e-cigarettes “or any product that has been approved by the United States Food and Drug Administration for sale as a tobacco cessation product, as a tobacco dependence product, or for other medical purposes, and that is being marketed and sold solely for such an approved purpose” are not considered “other tobacco products.”

Other tobacco products remain subject to excise tax in DC, but the way that excise tax is calculated will change on October 1, 2014. Currently calculated on a per ounce basis, it will be changed “to a calculated rate on wholesale sales.” The calculated rate will be equal to the rate for a package of 20 cigarettes, “expressed as a percentage of its average wholesale price as of the previous March.”

Beginning October 1, the rate of tax applicable to wholesale sales of other tobacco products will be 70%.

Got it?

Additional information, including the proper form to use to report the tobacco products excise tax is available in the Office of Tax and Revenue Notice 2014-07 and Notice 2014-08.

Learn how automated sales tax works.

photo credit: lindsay-fox via photopin cc


Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
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.