Montana Governor Signs 35 Cents Tax Cap for Premium Cigars

On Friday, Gov. Greg Gianforte signed S.B. 122, a bill that establishes a tax cap of 35 cents for premium cigars sold in Montana.

Monana’s tax rate for cigars is 50 percent of the wholesale price, though S.B. 122 will cap that amount at 35 cents for “premium cigars.” The bill defines a “premium cigar” as a cigar that uses a whole-leaf wrapper, is not rolled by a machine, does not contain a tip or mouthpiece and does not have a characterizing flavor other than tobacco.

A cigar with an MSRP of $9.50 is currently assessed around $2.24; the new bill reduces that number to 35 cents, meaning—at a minimum—consumers should expect to see a savings of $1.89 when the law takes effect July 1, 2023.

The bill’s original text would have established a tax cap of 10 cents per cigar and would have applied to all cigars. It was amended in the Montana Senate in March.