Premium cigars sold in Indiana could be getting a bit cheaper, as a bill that includes a $0.72 tax cap passed the state Senate by a 37-12 vote on Tuesday.
According to its sponsor, Sen. Travis Holdman, R-Markle, SB 382 seeks to bring parity to the various tobacco and nicotine product tax rates in the state. In particular, it seeks to address the fairly new taxes on the various types of e-cigarettes and e-liquids, which was put into place during the 2021 legislative session.
But while premium cigars aren’t a key part of the bill’s focus, they could still benefit if the bill passes. Currently, Indiana imposes a tax rate of 24 percent of the wholesale price on all cigars, which in the case of a cigar with an MSRP of $9.50 means it costs $11.78 by halfwheel estimates.
SB 382 calls for that rate to be capped at $0.72 for all cigars with a wholesale price of $3 or more. That same cigar with an MSRP of $9.50 would decrease in price to $10.94, again by halfwheel estimates. Cigars with a wholesale price under $3 would still be taxed at the 24 percent rate.
The bill now heads to the Indiana House of Representatives for consideration. If passed and signed into law, the cap would become effective on Jan. 1, 2023.