The "End Tobacco Loopholes Act" increases excise taxes on tobacco products and nicotine, adjusting rates to create tax equity among them, and adjusts tax rates for inflation starting in 2026.
Raja Krishnamoorthi
Representative
IL-8
The "End Tobacco Loopholes Act" increases excise taxes on tobacco and nicotine products to create tax equity across all such products, including roll-your-own tobacco, pipe tobacco, smokeless tobacco, cigars, and nicotine used in vaping. It adjusts these tax rates for inflation starting in 2026 and imposes floor stocks taxes on existing inventories, while also providing a credit to offset these taxes. The Act sets specific effective dates for the tax changes, with a transition rule for businesses manufacturing or importing taxable nicotine.
Tobacco and Vape Taxes Set to Double Under New Bill: Smokeless Products Hit Hardest
The "End Tobacco Loopholes Act" aims to jack up taxes on pretty much everything tobacco-related, from cigarettes and cigars to smokeless tobacco and vaping products. The goal? To make the taxes on all these things equal, and, of course, to bring in more cash for the government.
Leveling the Tax Playing Field
The bill really goes after smokeless tobacco, like pouches and lozenges. Right now, these are taxed way less than cigarettes. This law would change that, fast. For example, a pack of 20 single-use pouches would see a tax of about $2.01 (based on $100.66 per thousand units, as stated in SEC. 2). Roll-your-own and pipe tobacco are also getting hit, jumping to $49.56 per pound. Even vaping liquid is getting tagged – with tax based on nicotine content (SEC. 2).
Real-World Wallet Impact
Imagine you're someone who uses smokeless tobacco to get through a long shift. This bill could mean paying significantly more for your usual can of pouches. Or, if you vape, the cost of your e-liquid is going up based on how much nicotine is in it. For cigarette smokers, the tax per pack is effectively doubling (SEC. 2). These aren't small changes; they're hitting the wallet directly, and if you are on a budget, it's going to be felt.
The Inflation Factor
Starting in 2026, these taxes will also automatically increase with inflation (SEC. 2). That means the price hikes aren't a one-time deal. They're designed to keep climbing, year after year. For someone working paycheck to paycheck, that's a big deal. It might mean cutting back, or it might push people towards cheaper, potentially unregulated, alternatives.
Stockpiling and Transition Time
There's also something called a "floor stocks tax" (SEC. 2). Basically, any tobacco products sitting on store shelves before the tax increase goes into effect will also get taxed. This could lead to a rush to stock up before the deadline, and stores might even raise prices before the tax officially hits to cover their own costs. The bill does give a $500 credit per person, but for bigger operations, it is a drop in the bucket. And, while businesses making or importing vaping nicotine get a grace period to keep operating while their permits are processed (SEC. 2), there is a question of how long they can stretch that out.