Oregon’s Cigar Tax Cap Increases Today

Cigars in Oregon will be getting a bit more expensive today, as a tax increase approved by voters in November has gone into effect.

The increase comes by way of a change to the cap on cigar taxes in the state; previously, it had been 50 cents per cigar, as of today it is $1 per cigar. In practical terms, a cigar with an MSRP of $9.50 will jump from $10.50 at the register to $11.50, by halfwheel estimates.

While cigar smokers certainly won’t like the increase, it beats the original proposal to remove the cap completely. Had that version gone to voters and been passed, that same cigar with an MSRP of $9.50 would have increased to $15.68, by halfwheel estimates, as it would be subject to the full tax rate of 65 percent of the wholesale price. That proposal was defeated thanks to an amendment made by Sen. Mark Hass, D-Beaverton.

In addition to the increase in the cigar tax cap, the law passed by voters requires that all cigars sold individually in the state have a minimum wholesale price of $3, unless they are sold in a package of four that has a minimum wholesale price of $12.

Cigarettes, e-cigarettes and vaping products will see an even more substantial increase. The tax on cigarettes has gone up by $2 per pack, an increase from $1.33 to $3.33 per pack of 20. E-cigarettes and other nicotine vaping products are now defined as tobacco products, which subjects them to the state’s tax rate of 65 percent on those products.

Retailers are also facing a floor tax of 10 cents for each cigarette in their possession or under the control of the dealer as of 12:01 a.m. on Jan. 1, 2021.

The ballot item, Measure 108, was approved by 66.3 percent of voters.