Sponsors (4)
Introduced March 3, 2025 by S. Raja Krishnamoorthi · Last progress March 3, 2025
The bill raises and indexes federal tobacco and nicotine excise taxes and clarifies tax rules to reduce use and boost revenue, but it increases consumer prices and compliance burdens and disproportionately impacts low‑income users and small businesses.
People who smoke or use nicotine products: higher federal excise taxes on cigarettes, cigars, smokeless tobacco, and many vaping products are likely to reduce use and improve public health by lowering smoking- and vaping-related disease.
Taxpayers and the federal government: substantially higher excise rates will increase federal revenue, providing additional funds for government programs or deficit reduction.
Taxpayers and the federal budget: indexing chapter 57 tax rates to inflation after 2026 preserves the real value of excise collections over time, helping sustain revenue and the policy's long‑term effect.
Low-income individuals who smoke or use nicotine products: higher excise taxes are regressive and will take a larger share of income from lower‑income households.
Consumers who buy tobacco and many vaping products: substantially higher excise rates will raise retail prices, increasing out‑of‑pocket costs for smokers and vapers.
Small tobacco retailers, wholesalers, and some manufacturers: the floor‑stocks tax, new classification rules, and rate changes may cause inventory losses, higher operating costs, and administrative burdens.
Based on analysis of 2 sections of legislative text.
Raises and aligns federal excise taxes on tobacco products, creates a new per‑weight excise tax on extracted/synthetic "taxable nicotine," and defines single‑use smokeless units as taxable smokeless tobacco.
Raises and aligns federal excise taxes across tobacco and nicotine products, creates a new tax category for extracted/concentrated/synthesized nicotine used in vaping and similar products, and defines/targets single‑use smokeless tobacco units. It also updates definitions and lets the Treasury issue guidance on how to measure cigar weight for tax purposes. The changes increase per-unit tax rates for roll‑your‑own, pipe, cigars, smokeless tobacco (including a higher rate for discrete single‑use units), and impose a per‑weight tax on "taxable nicotine."