December 2025: Italy’s 2026 Tobacco Tax Hike – What to Expect
Starting on January 1, 2026, the Italian Government will implement a significant increase in excise taxes on tobacco and nicotine products following the approval of the 2026 Budget Law. The reform introduces a multi-year framework for raising taxes on cigarettes, rolling tobacco, electronic cigarettes, heated tobacco products, and related nicotine items. The measure is designed to achieve two parallel objectives: strengthening state tax revenues and discouraging nicotine consumption through progressively higher retail prices.
Excise duties, which constitute a substantial portion of the final retail price of tobacco products, will be increased gradually over a three-year period. Under the new rules, the specific excise duty on cigarettes will rise from the current level of €29.50 per 1,000 cigarettes to €32 in 2026, €35.50 in 2027, and €38.50 from 2028 onwards. This phased approach is intended to mitigate the immediate impact on consumers by spreading price increases over time rather than introducing abrupt adjustments. While traditional cigarettes are the most visible category affected, the reform also extends to finely cut tobacco, electronic cigarette products, and heated tobacco, although the applicable formulas and timelines vary by product segment.
Based on official budget tables and market estimates, these tax increases are expected to translate into steady retail price rises. In 2026, the higher excise burden should lead to an average increase of around 14 to 15 cents per pack of cigarettes. In 2027, a further increase of approximately 10 to 12 cents per pack is anticipated, followed by an additional rise of about 12 to 14 cents in 2028. Taken together, the cumulative increase between 2026 and 2028 is expected to amount to roughly 40 to 60 cents per pack. At present, the most popular cigarette brands in Italy typically retail between €5.30 and €5.50 per pack. Assuming manufacturers and retailers pass the tax increases fully on to consumers, prices for these products could settle between approximately €5.70 and just over €6.00 by 2028.
The impact will not be limited to manufactured cigarettes. Finely chopped tobacco for rolling cigarettes is set to experience proportionally larger increases in excise duties. A 30-gram pouch could cost around 50 cents more as early as 2026, with cumulative increases potentially approaching 80 cents by 2028. Products for electronic cigarettes and heated tobacco will also face higher taxation, although these categories are governed by different excise structures. In the case of e-liquids and flavorings, excise duties may be applied partly as a percentage of the final retail price, rather than solely as a specific amount per unit, resulting in varied price effects across brands and formats.
According to the Italian authorities, the tax increases pursue two main policy goals. The first is fiscal. The government estimates that higher excise duties on tobacco and nicotine products could generate approximately €1.46 billion in additional revenue over the 2026–2028 period, providing a meaningful contribution to public finances. The second objective is linked to public health. Gradual price increases are widely regarded as an effective tool for reducing tobacco and nicotine consumption, particularly among young people and occasional users. However, the extent to which higher prices lead to sustained reductions in consumption remains a subject of debate among economists, public health experts, and industry stakeholders.
Italy’s decision to raise tobacco excise duties also fits within a broader European regulatory context. At EU level, the European Commission has proposed a revision of the Tobacco Taxation Directive aimed at modernizing and harmonizing excise duties across member states. The proposal would raise minimum tax levels, extend taxation to newer nicotine products, and introduce mechanisms to account for inflation and differences in purchasing power. Although these EU reforms are still under discussion and are expected to include transition periods before full implementation, they are already influencing national tax strategies. Italy’s planned increases can be seen as partially anticipating this wider European shift, even though the national measures do not fully align with all elements of the Commission’s proposal.
For Italian consumers, the coming years will therefore be characterized by a steady rise in the cost of cigarettes and other nicotine products. While the gradual nature of the increases may soften the immediate impact, the cumulative effect will be noticeable across all major product categories. Final retail prices will ultimately depend not only on excise changes but also on pricing strategies adopted by manufacturers and retailers. At the same time, further developments at EU level could reshape the tobacco and nicotine tax landscape beyond 2028, adding another layer of uncertainty for both consumers and the industry.
