Standardising the Measurement of E-cigarette Tax Rates in the USA (2nd Edition), 2010–2023

Chad Cotti, Erik Nesson, Michael F Pesko, Serena Phillips
Standardising the Measurement of E-cigarette Tax Rates in the USA (2nd Edition), 2010–2023

Introduction: 30 states enacted e-cigarette taxes by the end of 2023. E-cigarette tax schema in the USA vary, in contrast to cigarette taxes that are standardised as an excise tax amount per pack. Some states use excise taxes on liquid and containers, others wholesale sales taxes and others retail sales taxes. Increasingly, states are taxing open system and closed system products differently. It is therefore difficult to understand the relative magnitudes of these e-cigarette taxes and their size relative to cigarette taxes.

Objective: To update and publish a database of state and local quarterly e-cigarette tax rates from 2010 to 2023, standardised as the rate per millilitre of fluid, for both closed system and open system products.

Methods: Using Universal Product Code-level e-cigarette sales from the NielsenIQ Retail Scanner Data along with e-cigarette product characteristics collected from internet searches and visits to e-cigarette retailers, we develop a method to standardise e-cigarette tax rates as an equivalent average excise tax rate measured per millilitre of fluid.

Results: In 2023, the average American resided in a location with $3.21 in cigarette taxes and $0.49 in closed system e-cigarette taxes (per 0.7 fluid millilitre). Among the 10 states using segmented taxation for closed and open systems, the average open system e-cigarette tax was 85% lower.