Tobacco Tax Updates in the 2027 Executive Budget Proposal Would Be a Lifeline for Medicaid, Preserving Coverage for Eligible Residents

The American Lung Association praises Governor Whitmer for including significant provisions for smoking prevention programs, an increase in the tobacco tax, and the creation of tax parity for nicotine products in her state budget proposal announced yesterday.  

Here's a breakdown of the Governor's budget proposal: 

• A recommended increase in funding for smoking prevention of $8.9 million, bringing total funding to $16 million. The suggested increase would be dependent on the creation of a new vape and alternative nicotine product tax. 

• A $1 increase to raise the cigarette tax from $2 to $3 per pack of 20 cigarettes. 

• A provision to increase the tax on other tobacco products (e.g., pipe tobacco, smokeless tobacco, and snuff) from 35% of the wholesale price to 57%, generating $232 million in FY27 and $202 million in FY28, with the revenue directed to the Medicaid Benefits Fund to maintain coverage for eligible residents affected by federal cost shifts targeting Medicaid. 

"Tobacco remains the leading cause of preventable death in Michigan and the United States," said Kezia Ofosu Atta, Director of Advocacy at the American Lung Association. "Michigan has not raised its cigarette tax in 22 years, and this proven public health strategy is long overdue. We applaud Governor Whitmer for including these robust measures in her budget proposal and urge the legislature's support for them in the final budget enacted in fall 2026. Raising tobacco taxes, ensuring parity, and increasing tobacco prevention funding are strong tobacco prevention policies, critical in helping initiate quit attempts, preventing kids from starting to use tobacco products, thereby saving lives in Michigan." 

Healthcare providers and QuitLines from both Michigan and the American Lung Association provide support to smokers who want to quit. Quitting tobacco leads to the potential for better health outcomes and reduced health care costs. Anyone can connect with us by calling 1-800-LUNGUSA or 1-800-586-4872 (press 2), or by submitting a question or using live chat at lung.org/helpline.