Bill Would Introduce 50 Cent Cigar Tax Cap in Idaho

A new bill introduced in the Idaho Senate would decrease the taxes paid on cigars in the state.

S.B. 1108 would modify Idaho’s laws regarding tobacco taxes by introducing a 50-cent tax cap for cigars. Currently, cigars in Idaho are charged a tax rate of 35 percent of their wholesale price without a cap, meaning the more expensive the cigar, the higher the total tax amount paid to the state.

For example, halfwheel estimates that a cigar with an MSRP of $9.50 likely costs around $12.83 before sales tax; roughly $1.66 of that is paid in tax to the state. If S.B. 1108 were to pass, the tobacco tax Idaho collects for that same cigar would be capped at 50 cents, lowering the final price to an estimated $10.50.

Cigars with an MSRP of $2.85 or less would likely not benefit from the tax cap, but any cigar priced above $2.85—the vast majority of premium cigars—would likely see savings. The largest savings would go to more expensive cigars. For example, halfwheel estimates that a cigar with an MSRP of $25 likely retails for around $33.75 in Idaho before sales tax; that price would drop to $26 if S.B. 1108 becomes law.

The bill’s text indicates that if S.B. 1108 passes, it will go into effect on July 1, 2023.