Bills introduced in both houses of the New York State Legislature could increase the tax on cigars in New York state to a minimum of 95 percent of the wholesale price.

Currently, cigars are taxed at a rate of 75 percent of their wholesale price, already amongst the highest in the nation. Under the proposed legislation, that number would increase to 95 percent. In practical terms, a cigar with an MSRP of $9.50 likely has a price of $16.63 before sales tax in New York under current laws per halfwheel estimates, that would increase to $18.53 if the new tax rate went into effect.

But the effect would be higher for cigars with an MSRP of $9.15 or less that come in packs of five or fewer.

The bills—A.10016, introduced by Linda B. Rosenthal, D-67; and S.1167A, introduced by Sen. Gustavo Rivera, D-33—are identical and create a scenario where 95 percent is simply the minimum tax rate. For cigars packaged in packs of five cigars or fewer, the bills’ texts say that it would either be 95 percent or an amount that is equal to the taxes on a pack of 20 cigarettes, whichever is greater.

Currently, New York’s tobacco tax is $4.35 per pack, the highest in the U.S. For cigars with an MSRP of more than $9.15, the 95 percent tax rate would be more than $4.35, but for cigars with lower prices, the proposed legislation would require them to pay the $4.35 minimum.

For example, a cigar with an MSRP of $6 likely costs around $10.50 before sales tax currently. With the proposed tax hike, that number would increase to $14.70 before sales tax.

If the bill were to become law, New York would have the highest tax on cigars in the U.S. topping Utah’s current tax rate of 86 percent of the wholesale price.

This is actually not the highest increase Rep. Rosenthal has proposed. In 2020, she introduced legislation that would increase the tax on other tobacco products to 129 percent. That bill received zero co-sponsors.

Note: halfwheel estimates these prices using industry standard pricing models where retailers include the state tax on cigars as part of the cigar’s “cost” to calculate a retailers margin. Some retailers do not adhere to this standard but many, if not most, do.

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Charlie Minato

I am an editor and co-founder of Media, LLC. I previously co-founded and published TheCigarFeed, one of the two predecessors of halfwheel. I have written about the cigar industry for more than a decade, covering everything from product launches to regulation to M&A. In addition, I handle a lot of the behind-the-scenes stuff here at halfwheel. I enjoy playing tennis, watching boxing, falling asleep to the Le Mans 24, wearing sweatshirts year-round and eating gyros. echte liebe.