Nevada 50 Cent Cigar Tax Cap Bill Passes House (Update)

A new bill introduced last week in the state of Nevada would reduce the taxes paid on most cigars sold in Nevada.

Update (June 1, 2023) — On May 31, 2023, the bill passed the Nevada Assembly by a vote of 35-7. It now moves to the Nevada Senate.

Rep. Brian Hibbetts, R-Las Vegas, and Rep. Duy Nguyen, D-Las Vegas, have introduced A.B. 232 which would introduce a 50-cent tax cap for premium cigars in Nevada. Currently, all cigars pay the state’s OTP tax rate, 30 percent of their wholesale price. This bill would keep the 30 percent tax rate but limit the total tobacco taxes paid to no more than 50 cents if a cigar is designated as a “premium cigar.”

That means a cigar with an MSRP of $9.50 likely pays $1.43 in tobacco taxes.  If A.B. 232 were passed, that amount would be reduced to 50 cents. If the bill were to pass, consumers could see savings between 93 cents and $1.85 for a cigar with an MSRP of $9.50 depending on how retailers calculate their margins. The savings would be more significant the more expensive a cigar is; the tax cap would not affect cigars with MSRPs below $3.34.

Interestingly, A.B. 232 defines a “premium cigar” as “a cigar that is rolled by hand, has a wrapper made of whole tobacco leaves and does not have a filter or mouthpiece.” This is a broader definition than the one oftentimes referenced and would mean that large flavored cigars like ACID and Tatiana would be eligible for the tax cap, as would many of the cigars that J.C. Newman makes at its El Reloj factory in Tampa, which the company describes as being made by vintage machines.

This story was originally published on March 7, 2023.