vapor products tax

Delaware has imposed new tax requirements for sellers of e-cigarettes and other vaping products.

The Delaware Legislature has increased the excise tax on tobacco products and imposed a tax on vaping products with the enactment of House Bill 242, which received Governor John C. Carney Jr.’s signature on July 3, 2017.

Vapor products are increasingly capturing the attention of state lawmakers, who see them as a potential new source of revenue. According to the Tax Foundation, only four states, three localities, and the District of Columbia had enacted taxes on vapor products as of January 1, 2016: Kansas, Louisiana, Minnesota, North Carolina, Montgomery County (Maryland), Chicago, and Cook County (Illinois). West Virginia and Pennsylvania imposed new taxes on electronic cigarettes and vapor products in 2016, and California followed suit as of January 1, 2017.

Two bills seeking to tax vapor products (HB 2165 and HB 2144) were considered by the Washington Legislature this session, but both died.

Electronic smoking devices and vaping products

The Delaware measure adds vapor products to the definition of “tobacco products” and requires dealers of vapor products to obtain licenses just like dealers of traditional tobacco. It defines “vapor product” as “any nicotine liquid solution or other material containing nicotine that is intended to be used with or in an electronic smoking device.”

“Electronic smoking device” is defined as “a nonlighted, noncombustible device that employs a mechanical heating element, battery, or circuit regardless of shape or size, to produce aerosolized or vaporized nicotine for inhalation into the body of an individual.” Electronic smoking devices include e-cigarettes, e-cigars, e-pipes, e-hookahs, vape pens, as well as “any other similar product with any other product name or descriptor.”

As of January 1, 2018, the sale or use of vapor products is subject to a tax of 5 cents per fluid milliliter of vapor product. Invoices for vapor products must include “the amount of vapor product in milliliters.”

Cigarette tax

Delaware’s current cigarette tax of $1.60 per pack of 20 cigarettes ($.08 per stick) is paid by cigarette wholesalers and passed on to consumers. Starting September 1, 2017, the cigarette tax rate will jump to $2.10 per 20-pack.

Tax on other tobacco products

Other tobacco products — chewing tobacco, cigars, and snuff, but not vapor products or moist snuff — are currently subject to a tax of 15 percent of the wholesale price. That rate doubles on September 1, to 30 percent of the whole price. The tax on moist snuff jumps from 54 cents per ounce to 92 cents per ounce.

Learn more about e-cigarettes and excise tax in this white paper.