June 2026: New York enacts 75% wholesale tax on nicotine pouches
The New York Governor signed a 75% wholesale tax on nicotine pouches into law. The measure differs from the state’s cigarette tax, which is set at $5.35 per pack. The state expects the tax to generate an additional $50 million annually for the Health Care Reform Act fund beginning in fiscal year 2028. State officials have argued that nicotine pouches present public health concerns and should be taxed in the same manner as traditional tobacco products.
Philip Morris International (PMI) U.S. criticized the measure, describing the 75% wholesale tax as excessive and arguing that alternative approaches could have generated greater state revenue while reducing potential impacts on small businesses. Industry representatives contend that higher taxes on nicotine pouches could make smoke-free alternatives less affordable for adult smokers, potentially discouraging switching away from cigarettes. They also argue that the measure could encourage illicit trade and increase demand for unregulated products that lack age-verification safeguards. Public health advocates, meanwhile, have long supported taxing all nicotine products as a way to reduce nicotine use and limit youth access, a priority that has been emphasized by the state administration.
May 2026: Oregon Imposes New Nicotine Pouch Tax to Fund Wildfire Prevention
Nicotine pouch products, such as ZYN, VELO and on!, are now subject to a new tax in Oregon aimed at helping fund wildfire prevention and mitigation efforts. Under the new law, nicotine pouch cans with 20 pouches or fewer face a $0.65 tax, with an additional per-pouch fee applied to larger cans. The measure was introduced after Oregon spent more than $350 million fighting wildfires in 2024, far above its original firefighting budget. State lawmakers said the tax could generate tens of millions of dollars over the next two years to support wildfire prevention, forest thinning, and community resilience programs.
The tax is part of a broader wildfire funding package that also includes higher timber-related fees and the use of interest income from Oregon’s rainy day fund. Supporters argue the nicotine pouch tax creates a dedicated, long-term funding source for wildfire mitigation while also extending taxation to oral nicotine products that were previously untaxed in the state.
April 2026: Iowa Advances Tax on Nicotine Pouches and Vapes to Fund Pediatric Cancer Research
Iowa lawmakers are advancing legislation to tax nicotine pouches and vape products, bringing these categories more in line with the state’s broader tobacco taxation framework. The proposal introduces a 5-cent tax per standard 20-pouch can and per 1 ml of e-liquid, with the total tax burden rising proportionally for larger pouch cans and higher-capacity vape pods or bottles. While public health advocates argue the tax level may be too modest to significantly curb consumption, supporters view it as a pragmatic first step that establishes a structure for future increases. Overall, the bill reflects a continued shift toward taxing next-generation nicotine products as their market share expands.
March 2026: Utah Introduces New Cigarette and Nicotine Pouch Tax Structure
Utah has approved amendments to its nicotine product tax code, introducing new tax rates and updated definitions for cigarettes, nicotine pouches, and other nicotine products. The new tax framework will take effect on July 1, 2026, and represents a restructuring of how nicotine products are taxed in the state.
The most notable change is the new cigarette tax rate, which has been set at 11 cents per cigarette, replacing the previous structure. This effectively sets a fixed tax per cigarette rather than relying on older classification structures. The law also introduces a new specific tax structure for nicotine pouch products, which will be taxed at $1 per can plus an additional 5 cents for each pouch exceeding 20 pouches in the container. This creates a per-product and per-pouch tax system rather than a weight-based tax, which had previously been used for alternative nicotine products.
In addition to the new tax rates, the legislation updates legal definitions for nicotine products, including nicotine pouches, electronic cigarette products, and other alternative nicotine products. The updated definitions are intended to ensure that newer nicotine formats are clearly covered by the tax code and taxed consistently going forward.
The broader reform also restructures taxation for other alternative nicotine products that are not pouches, which will be taxed based on a percentage of the manufacturer’s sales price. Overall, the legislation replaces older weight-based taxes for many products with a combination of per-unit taxes for nicotine pouches and price-based taxes for other nicotine products.
Overall, the Utah reform represents a significant restructuring of nicotine taxation in the state, introducing a specific tax on nicotine pouches, a revised per-cigarette tax, and updated definitions to ensure all nicotine product categories are clearly covered under the tax code starting in mid-2026.
March 2026: U.S. States Move to Tax Nicotine Pouches Like Tobacco
A growing number of U.S. states are moving to tax nicotine pouches in the same way as traditional tobacco products, reflecting both the rapid growth of the category and declining cigarette tax revenues. Policymakers argue that nicotine pouches should be taxed due to addiction risks and youth usage concerns, while critics argue high taxes could discourage smokers from switching to less harmful alternatives. According to recent policy discussions, at least five states are currently considering new taxes or tax increases on nicotine pouches: New York, Michigan, Massachusetts, Vermont, and Washington.
New York is one of the most prominent examples. The Governor has proposed taxing nicotine pouches at the same 75% wholesale rate applied to other tobacco products. The proposal is part of the state budget and is expected to generate tens of millions of dollars in revenue annually. Supporters argue the tax would help reduce youth nicotine use and fund healthcare programs. Opponents, including business groups and harm-reduction advocates, argue that taxing smoke-free alternatives like cigarettes could discourage smokers from switching to lower-risk products.
Michigan is also considering a new excise tax on nicotine pouches as part of broader tobacco and nicotine regulation efforts. The state government is reviewing how to classify nicotine pouches within existing tobacco tax frameworks, with the likely outcome being taxation similar to other tobacco products. The debate in Michigan mirrors discussions in other states: whether nicotine pouches should be taxed based on nicotine content, price, or treated as traditional tobacco products.
Lawmakers in Massachusetts are weighing a new tax specifically targeting nicotine pouches. The state already has some of the strictest tobacco regulations in the U.S., and policymakers are considering extending those policies to newer nicotine products. Massachusetts policymakers have historically taken a strong regulatory approach to nicotine and tobacco products, so inclusion of nicotine pouches in tobacco tax structures would be consistent with previous policy trends.
Vermont lawmakers are considering increasing taxes on nicotine pouches as part of broader tobacco tax adjustments. The state is reviewing whether nicotine pouches should be taxed at higher rates to align with other nicotine products. As in other states, the policy discussion is driven partly by declining cigarette consumption and therefore declining cigarette tax revenues.
Washington State has already taken steps to include nicotine pouches within the definition of tobacco products for taxation purposes. Proposed legislation would formally classify nicotine pouches as tobacco products, meaning they would be taxed under the state’s tobacco tax system. Washington is also considering broader increases on non-cigarette nicotine products, which could significantly increase the tax burden on nicotine pouches.
The push to tax nicotine pouches is part of a broader trend. As cigarette consumption declines, states are increasingly looking to alternative nicotine products such as vapes and nicotine pouches as new sources of tax revenue. In 2025 alone, legislators in at least 20 states introduced bills related to nicotine pouch taxation. This reflects a major shift in tobacco taxation policy. Historically, cigarette taxes were the primary source of tobacco tax revenue, but as smoking declines and alternative nicotine products grow rapidly, states are updating tax systems to include these new categories.
The movement to tax nicotine pouches like tobacco is gaining momentum across the United States. New York, Michigan, Massachusetts, Vermont, and Washington are all considering new taxes or tax increases targeting nicotine pouches. The policy debate centers on two competing arguments: public health and youth prevention versus harm reduction and smoker switching. Regardless of the outcome in individual states, the broader trend is clear: nicotine pouches are increasingly being treated not as a separate category, but as part of the broader tobacco tax system.
January 2026: New York Proposal to Tax ZYN and Other Nicotine Pouches Triggers Backlash
New York Governor proposed applying a 75% tax on wholesale price of nicotine pouches, such as ZYN, under the state budget plan. The proposal treats nicotine pouches the same as traditional cigarettes in an effort to raise revenue and support public-health and budgetary goals. The measure is projected to bring in about $18 million in its first fiscal year and roughly $44 million annually once fully implemented, adding to funding for state programs amid broader fiscal challenges. Under the proposed plan, ZYN, the first nicotine pouch approved by the U.S. Food and Drug Administration, and similar products would face the high excise tax currently applied to cigarettes, despite not containing tobacco.
However, the plan has sparked a strong backlash from industry groups, public-health researchers, and some law-enforcement voices who say taxing less harmful alternatives at the same rate as cigarettes could undermine harm-reduction strategies and make it harder for adult smokers to switch to lower-risk products. The proposed tax raises serious concerns about affordability and cessation incentives, while a tiered tax system based on relative health risk could better serve public health. Critics also warn that the policy could inadvertently boost illegal markets or push consumers back to more harmful combustible tobacco use.
Supporters of the tax argue that broader taxation of nicotine products can help address youth uptake and fund essential services, but opponents counter that it should be paired with targeted enforcement against illegal products and not bluntly equated with cigarettes. The debate reflects wider tensions in nicotine regulation: balancing fiscal needs, smoking cessation goals, and concerns about youth addiction. This proposal comes as New York continues other tobacco and nicotine related efforts, including crackdowns on illicit flavored vapes and ongoing discussions about restrictions on flavored nicotine pouches at the legislative level.
January 2026: Washington State’s New Nicotine Tax Reshapes the Market as Prices Nearly Double
Washington State enacted one of the most far-reaching nicotine tax changes in the United States, fundamentally altering how modern nicotine products are treated under state excise law. The new regime, which took effect on January 1, 2026, expands the state’s tobacco products tax to cover all nicotine-containing products, regardless of whether the nicotine is derived from tobacco or produced synthetically. The change closes a long-standing gap in Washington’s tax code that had allowed most new nicotine products, particularly nicotine pouches and certain vaping products, to face little or no excise taxation compared with traditional tobacco.
The reform was adopted through legislation passed during the 2025 legislative session and was framed by lawmakers as both a public health measure and a fiscal update. As nicotine consumption has increasingly shifted away from combustible cigarettes toward nicotine pouches, disposable vapes, and e-liquids, tax revenues tied to tobacco use had come under pressure. By broadening the tax base, the state aims to align taxation with evolving consumption patterns while also discouraging nicotine use through higher prices.
Under the new law, nicotine products are subject to a 95% excise tax calculated on the taxable sales price (wholesaler price). This is a value-based tax rather than a volume-based levy and applies uniformly across product categories. Nicotine pouches, disposable vapes, refill liquids, and other nicotine-containing items now fall under the same high-rate structure that already applied to many tobacco products. FDA-approved nicotine replacement therapies, such as gums and patches marketed for smoking cessation, are excluded.
The tax is imposed at the distributor level, meaning it is embedded into the wholesale price before products reach retailers. While consumers may not see the excise tax listed separately on receipts, the effect is directly reflected in shelf prices. Retailers were also required to report and pay tax on nicotine inventory held as of January 1, 2026, ensuring that stock purchased before the law came into force was not exempt.
The price impact is substantial: retail prices for many nicotine products are expected to nearly double once the excise tax and standard sales tax are fully reflected. Using nicotine pouches as an illustration, a can of ZYN that sold for about $6 before the new tax provides a clear example of the mechanics. Applying a 95% excise tax on the estimated wholesaler price and adding Washington’s retail sales tax, which is close to 10% in many areas, the final consumer price for ZYN moves toward $10.5 per can. Actual prices will vary depending on distributor pricing and local tax rates, but the example demonstrates why consumers are experiencing sharp increases at the counter.
From the state’s perspective, the fiscal stakes are meaningful. Budget estimates suggest the expanded nicotine tax will generate more than $55 million in revenue in fiscal year 2027, with annual collections projected to rise toward $67 million by the early 2030s. These funds are expected to support general state spending and public health priorities, while also compensating for declining cigarette volumes over time.
The policy has also triggered concern among small retailers and specialty vape and smoke shops, which argue that the sudden jump in prices could drive consumers to cut back sharply or seek alternatives outside the regulated market. Supporters of the law counter that the higher prices are a deliberate feature, not a flaw, designed to reduce nicotine consumption, particularly among younger users, and to ensure that all nicotine products are taxed consistently.
In effect, Washington’s new nicotine tax marks a decisive shift in how the state approaches modern nicotine use. By extending a 95% excise tax across the entire category and eliminating distinctions between tobacco-derived and synthetic nicotine, the state has created one of the most stringent nicotine tax environments in the country. For consumers, the most visible consequence is simple and immediate: products that once cost a few dollars now command prices closer to those historically associated with cigarettes, fundamentally changing the economics of nicotine use in Washington.
October 2025: Nicotine pouch tax goes into effect in Rhode Island
Tax changes took effect in Rhode Island on October 1 and the definition of other tobacco products (OTP) is expanded to include all products that contain nicotine, including tobacco-free nicotine pouches like ZYN and VELO. The tax rate on OTP is 80% of the wholesale price.
June 2025: Rhode Island and Oregon consider new tax schemes on nicotine pouches
The Rhode Island House of Representatives votes to introduce an 80% tax on the wholesale price of nicotine pouches while declining the Governor’s proposal to raise the tax on cigarettes. Meanwhile, lawmakers in Oregon consider imposing an excise tax of 65 cents on nicotine pouch packs with 20 or fewer pouches and 3 cents per pouch on packs with more than 20 pouches.
June 2025: Illinois will impose a 45% tax on nicotine pouches
The spending measure, Senate Bill 2510, the revenue and tax changes, House Bill 2755, and the budget implementation bill, House Bill 1075, passed with the legislature in Illinois with ease and the Governor issued a statement to confirm his approval. Accordingly, the tax rate on other tobacco products, including cigars and chewing tobacco, will be raised from 36% to 45% on the wholesale price, effective July 1, 2025, and the vape products (currently, taxed at 15% of the wholesale price) and nicotine pouches will also be included under the new tax scheme in Illinois. The state tax on a pack of 20 cigarettes remains unchanged at $2.98.
March 2025: Nicotine pouch tax proposals are under consideration in Nebraska, Michigan and Washington
In Nebraska, the Bill, that seeks to impose a 20% tax on the wholesale price for alternative nicotine products, advanced in the legislature with a 41-0 vote in the first round approval. The Bill updates the definition of alternative nicotine products and aims to keep up with the changing landscape of new nicotine products. The new definition not only includes the nicotine pouches (especially ZYN), but also any new nicotine product that may hit the market in the future.
In Michigan, the Governor proposed to tax non-tobacco nicotine products at the same rate as cigars or chewing tobacco – at 32% of the wholesale price. The proposed tax plan will apply to e-cigarettes (vapes) and nicotine pouches. The Administration estimates that the new “nicotine tax” will generate $57 million annual revenue. Michigan taxes cigarettes at a flat rate of $2 per pack while non-cigarette tobacco products are taxed 32% at the wholesale level. Nicotine products without tobacco are untaxed to date.
In Washington, state lawmakers are considering a new tax on nicotine pouches under the House Bill 2033 which sees to extend the definition of tobacco products to include all nicotine products – regardless of the source of nicotine (i.e. derived from tobacco or synthetic). This change would allow the state to collect taxes on a broader range of nicotine products, including nicotine pouches. The debate over the nicotine pouch tax comes as Washington faces a budget deficit. Lawmarkers estimate a shortfall of $6-$12 billion and hope that House Bill 2033 could help address some of the state’s financial challenges. The proposed tax could increase the price of a ZYN can from $6 to $11 and generate up to $132 million by 2029. Meanwhile, the critics, including local convenience store owners, argue the tax could push users back to more harmful products like cigarettes.
August 2024: Maine will impose a 43% tax on nicotine pouches
Maine extends the state tax on other tobacco products (OTPs), at the rate 43% of the wholesale price, to include nicotine pouches. ZYN retail price could increase from $5.5 to $8.0-$8.5 range if the state tax is fully passed on (i.e. ZYN-owner Philip Morris International and the retailers try to maintain the same level of US$ gross profit per can instead of absorbing a part of the tax burden).
August 2024: Minnesota will impose a 95% tax on nicotine pouches
The Governor of Minnesota, also the Democratic VP candidate, approved a 95% tax (on the wholesale sales price) for nicotine pouches. The law was is amended to include “similar tobacco-free product[s] containing nicotine” in the definition of “moist snuff” – thereby, rendering nicotine pouches subject to the same tax rate as moist snuff.
As a can of ZYN weighs only a fraction of the 1.2 ounce threshold, the higher of 95% of the wholesale sales price or $3.04 will be set as the effective tax rate. We estimate the 95% of the ZYN wholesale sales price to be higher than $3.04 – resulting in a state tax rate of ~$3.5 per can and implying an increase in ZYN retail price from $5.5 to $9.5-$10 range if the ZYN-owner Philip Morris International (PMI) and the retailers are to maintain the same level of gross profit (in absolute terms) per can.
August 2024: Nebraska mulls on a levy on nicotine pouches
Nebraska lawmakers consider a levy on alternative nicotine products, like the increasingly popular ZYN pouches, in an attempt to finance the reduction in property taxes1. ZYN users will pay a 10-cent tax per ounce (28.35 grams) under the amendment to Legislative Bill 9. A can of ZYN contains 15 of 0.4-gram pouches (i.e. 6 grams per can). The proposed tax rate corresponds to a minimal 2.1 cents levy per ZYN can (- which can be modified relatively quickly once established).
Nebraska lawmakers state that some underage vapers have switched to products like ZYN since schools installed vape detectors.
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