Virginia’s Cigar Tax Doubles Today

Cigar smokers in Virginia will find their favorite cigars costing a bit more today, as a doubling of the state’s cigar tax rate has gone into effect.

Passed in May as part of the state’s budget bill, H.B. 30 increases the state’s tax rate on cigars from 10 percent of the wholesale price to 20 percent. For a cigar with an MSRP of $9.50, that means it goes from costing $10.45 to $11.40, by halfwheel estimates, and that’s before any additional sales taxes are added.

Cigarettes are also getting more expensive, with the tax rate on them also be doubling, going from 1.5 cents per cigarette to 3 cents, or 60 cents per pack. Previously, Virginia had the second lowest rate in the country, behind only Missouri, which has a rate of 17 cents per pack. Even with the increase, Virginia will still have one of the lowest tax rates on cigarettes in the country.

That same doubling of the tax rates will also apply to other tobacco products, such as loose leaf tobacco, snuff and chewing tobacco. The state is also now taxing liquid nicotine products, at the rate of $0.066 per milliliter.

This could be the first step in an even larger increase in the tax rate. During the most recent session, the Virginia House of Delicates pushed H.B. 1120 onto the upcoming session’s schedule. That bill seeks to increase the tax on cigars and other tobacco products to 39 percent of the wholesale price, meaning that cigar with an MSRP of $9.50 would increase to $13.21 by halfwheel estimates. The cigarette tax would also increase to $1 per pack.

It is slated to be one of several tobacco-related bills considered during the next session, including one that would prohibit the sale of flavored tobacco products and one that would require tobacco retailers to obtain a new license from the state.