New York Plans Massive New Tax On Nicotine

New York State may soon add a 75 percent tax on nicotine, sending prices soaring.

New York State heavily taxes cigarettes, imposing the highest cigarette excise tax in the nation at $5.35 per pack. In addition to this state tax, a prepaid sales tax is applied, and New York City imposes an additional $1.50 per pack, bringing the combined tax to $6.85, often resulting in prices over $14 per pack.

Hochul Proposes Big New Tax on Nicotine Pouches in New York

This year, Gov. Hochul has proposed expanding the state's existing 75 percent wholesale tax on tobacco products to include nicotine pouches, like ZYN, and other alternative nicotine products.

Hochul's office says that nicotine pouches are a "public health concern".

Hochul's plan also redefines "tobacco products" to include tobacco-free nicotine pouches and lozenges, which are currently not subject to the same high excise taxes as cigarettes and cigars.

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If approved, all of these products would face the same 75 percent wholesale excise tax currently applied to other non-cigarette tobacco products in New York.

Reason For New Nicotine Tax

The average price for nicotine pouches is $5. Under this proposal, the tax would increase it to an estimated $8.75.

State Budget Director Blake Washington believes nicotine pouches are a "gateway" drug. The tax is intended to address public health concerns, particularly regarding youth use.

Once fully implemented, experts say the added tax would generate $54 million annually in new tax revenue for New York State.

Some Pushback

Some New York lawmakers and business leaders argue that raising taxes will fuel the illegal market. Others believe that nicotine pouches should be taxed at a lower "risk-proportionate" rate rather than the same rate as other non-cigarette tobacco

The maker of ZYN has criticized the plan, arguing that high taxes on smoke-free alternatives reduce the incentive for smokers to switch to less harmful products.

If approved, it will go into effect on September 1, 2026.

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