State Tobacco Excise Tax Methodology

The U.S. Surgeon General, in The Health Consequences of Smoking – 50 Years of Progress, released in January 2014 to commemorate the 50th anniversary of the first Surgeon General’s report on smoking in 1964, concluded that “increases in the prices of tobacco products, including those resulting from excise tax increases, prevent initiation of tobacco use, promote cessation and reduce the prevalence and intensity of tobacco use among youth and adults.”

Research has clearly demonstrated that as the price of cigarettes increases, consumption decreases. For each 10% price increase, it is estimated that consumption drops by about 7% for youth and 3 to 5% for adults. Increasing taxes on tobacco products other than cigarettes is also important as while rates of cigarette smoking are declining, rates of cigar smoking, and smokeless tobacco use are stagnant or increasing. In a number of states, rates of cigar smoking among youth exceed rates of cigarette smoking.

Prior to “State of Tobacco Control 2015” report, the American Lung Association assigned grades to states based on the level of a state’s cigarette tax only. However, starting with “State of Tobacco Control 2015,” taxes on tobacco products other than cigarettes were incorporated into the grading system. The grading system also was switched to a points-based system, with the level of state’s cigarette tax worth up to 30 possible points and taxes on other tobacco products worth up to 10 possible points, for a total of 40 points available in the grading category.

The 30 points for the level of a state’s cigarette tax will continue to be based on the average (mean) of all state taxes as the midpoint, or the lowest “C.” The average cigarette tax was chosen because it is often seen as an indication of where states are in their cigarette taxing policies. The average state excise tax on January 1, 2021 was $1.88 per pack. The range of state excise taxes ($0.17 to $4.50 per pack) is divided into quintiles, and a state is assigned six points for attaining each quintile.

The score earned for the level of a state’s cigarette tax is broken down as follows:

Score/Points

Tax

30

$3.76 and up

24

$2.82 to $3.759

18

$1.88 to $2.819

12

$0.94 to $1.879

6

Under $0.94

For taxes on tobacco products other than cigarettes, a state is evaluated on whether the tax on five specific types of tobacco products is a) equivalent to the state's tax on cigarettes and b) the tax on the specific type of tobacco product is not based on the weight of the product. Taxing tobacco products other than cigarettes by weight is inadequate because it means the tax level does not keep pace with inflation and tobacco industry or other price increases.

The five specific types of tobacco products other than cigarettes which states are evaluated on are:

  • Little cigars
  • Large cigars
  • Smokeless tobacco
  • Pipe/roll-your-own tobacco
  • E-cigarettes

In “State of Tobacco Control” 2020, e-cigarettes replaced dissolvable tobacco products as one of the five categories.

States can earn up to 2 points total for each type of other tobacco product; 1 point if the tax is equivalent to the cigarette tax and 1 point if the tax is not weight-based. States will not be penalized for having a weight-based tax if they also have a minimum tax that is equal to the current cigarette tax or the weight-based tax is equivalent to the cigarette tax.

The overall grade breaks down as follows:

Grade

Points Earned

A

36 to 40 points

B

32 to 35 points

C

28 to 31 points

D

24 to 27 points

F

23 and below points


Page last updated: January 27, 2021

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