Bill Seeks to Lower Virginia’s Cigar Tax to 30 Cents Per Cigar

A new bill seeks to dramatically lower the taxes for cigars sold in the state of Virginia to no more than 30 cents per cigar.

Lee Ware, R-Powhatan, has introduced H.B. 1417, which would decrease the tax rate for cigars from 20 percent of the wholesale price to 10 percent of the wholesale price with a maximum tax of 30 cents per cigar. Virginia’s current tax rate does not have a cap, meaning if H.B. 1417, the net effect would likely be more than cutting the tax rate in half.

A cigar with an MSRP of $9.50 is likely sold in Virginia for around $11.40 before sales tax. That cigar’s price would likely decrease to $10.10 if H.B. 1417 goes into effect per halfwheel estimates. H.B. 1417 would make Virginia’s cigar tax rate amongst the 10 lowest in the country.

Virginia’s cigar tax was 10 percent until July 2020, when a bill doubled the tax rate from 10 percent to 20 percent. Of note, the old tax rate did not have a cap.

Ware’s bill has been filed in the Virginia House of Delegates though it has not yet been referred to a committee.