Avalara Taxrates > Blog > Sales Tax Rate Changes > Time to stock up on cigarettes in Pennsylvania - Avalara

Time to stock up on cigarettes in Pennsylvania


 It's a good time to be a cigar smoker in Pennsylvania.

Smoking in Pennsylvania is about to become more expensive. To help reduce the state deficit, Pennsylvania lawmakers have enacted legislation that increases the rate of tax on tobacco cigarettes and most other tobacco products, and for the first time extends tax to electronic cigarettes. The changes take effect August 1, 2016 and October 1, 2016.

Cigarettes are already pricey in Philadelphia, where a $2 surcharge was added in 2014 to fund a seriously underfunded school district. The additional dollar will put City of Brotherly Love in the Top 3 highest city cigarette taxes, just after Chicago ($6.16 per pack) and New York ($5.85 per pack). Pennsylvania will take a place among the Top 10.

E-cigarettes

The new budget specifically extends tax to electronic cigarettes, which includes both the electronic oral device and the “liquid or substance place in or sold for use in an electronic cigarette.” The tax on e-cigarettes, which takes effect October 1, 2016, is “40% on the purchase price charged to the retailer.”

Tobacco cigarettes

Beginning August 1, 2016, the excise tax rate for cigarettes increases from 8 cents per cigarette to 13 cents per cigarette, or $1 per pack.

The budget also establishes a tax rate (55 cents per ounce) for a variety of tobacco products, as of October 1, 2016. The term “tobacco products” is defined as roll-your own tobacco and all manner of “smoking tobacco, snuff, dry snuff, snuff-flour, cavendish, plug and twist tobacco, fine-cut and other chewing tobaccos, shorts, refuse scraps, clippings, cuttings and sweepings of tobacco and other kinds and forms of tobacco, prepared in such manner as to be suitable for chewing or ingesting or for smoking in a pipe or otherwise, or any combination of chewing, ingesting, or smoking.” That covers just about all the products, excepting cigars.

Why not cigars? Because of the thriving cigar industry that has long existed in the state. According to Republican Senator Pat Browne (Lehigh), “If you decide to move against [the industry], you are essentially destroying a partnership that will encourage that business to vacate, to leave. And they would go to Florida,” taking their jobs with them. Were Pennsylvania to extend taxes to cigars, Florida would be the only state left to not tax all varieties of cigars — New Hampshire exempts premium cigars only (Philly.com).

Not everyone agrees. Eric Epstein, a political watchdog, chalks the loophole up to a “very aggressive and well-financed lobbying campaign.”

Additional details about the tobacco tax, including exceptions, are available in this 2016 state tax summary and the text of HB 1198.

Simplify excise tax compliance in all states with an automated solution. Learn more.


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.