Vermont Tobacco Tax: Rates, Licenses, and E-Cigarettes

The Vermont tobacco tax is $3.08 per pack of 20 cigarettes and 92 percent of the wholesale price on most other tobacco products, with special tiered rates for cigars, snuff, and vaping products. The tax is collected at the wholesale level, so it is built into the shelf price before sales tax is added. A federal excise tax of $1.01 per pack sits on top of the state rate.

Cigarettes, Little Cigars, and Roll-Your-Own

Vermont’s cigarette tax is set at 154 mills (15.4 cents) per stick under 32 V.S.A. § 7771. That works out to $3.08 for a pack of 20 and $3.85 for a 25-count pack.¹ The rate has been in place since July 1, 2015.²

Little cigars are taxed at the same per-stick rate. Vermont defines them as rolls of tobacco where 1,000 units weigh no more than four and a half pounds, which captures the slim, cigarette-sized cigars sold in convenience stores.³

Roll-your-own tobacco is taxed at 15.4 cents per 0.0325 ounces, roughly the amount in one hand-rolled cigarette. That comes to about $4.74 per ounce.² Wholesale dealers buy tax stamps from the Department of Taxes and affix them to every pack of cigarettes and little cigars before sale.

Cigar Tax Tiers

Cigars other than little cigars are taxed under 32 V.S.A. § 7811, and Vermont splits them into three tiers based on wholesale price:⁴

Wholesale price of $2.17 or less: 92 percent of wholesale.
Wholesale price of $2.18 through $9.99: a flat $2.00 per cigar.
Wholesale price of $10.00 or more: a flat $4.00 per cigar.

The flat caps keep premium cigars from being taxed at the full 92 percent rate. A $15 cigar owes $4.00 rather than $13.80.²

Snuff and Smokeless Tobacco

Vermont distinguishes snuff from “new smokeless tobacco” by moisture content. Snuff is finely cut or powdered tobacco with at least 45 percent moisture. New smokeless tobacco covers drier products and single-dose pouches or tablets regardless of moisture.³

Snuff is taxed at $2.57 per ounce or any fraction of an ounce, so a half-ounce tin still owes the full $2.57. New smokeless tobacco is taxed at the greater of $2.57 per ounce or $3.08 per package when the package holds less than 1.2 ounces. That minimum-per-package rule blocks manufacturers from shrinking package sizes to trim their tax bill.⁴

Pipe Tobacco and Other Products

Loose pipe tobacco and any other tobacco product not specifically carved out above is taxed at 92 percent of wholesale price.⁴

E-Cigarettes and Vaping Products

Vermont taxes “tobacco substitutes,” defined to include electronic cigarettes and any battery-powered device designed to deliver nicotine or other substances through inhaled vapor. FDA-approved cessation products and cannabis are excluded.⁵ The definition covers mods, pod systems, disposables, and e-liquid.

Wholesale dealers report and pay tax on vaping products using the same tobacco products return (Form CTT-646) they use for traditional tobacco, and the tax applies to the wholesale value of both hardware and liquid.⁶ There is no federal excise tax on vaping products, so the state tax is the only excise these items face.

Federal Excise Tax on Top

Federal excise adds another layer to whatever Vermont charges. Cigarettes carry a federal tax of $1.01 per pack of 20. Large cigars are taxed at 52.75 percent of the manufacturer’s sale price, capped at 40.26 cents per cigar. Pipe tobacco is taxed at $2.83 per pound.⁷ A pack bought in Vermont carries $3.08 in state excise and $1.01 in federal excise before the retail markup and 6 percent state sales tax.

Licenses Required to Sell

Vermont splits tobacco licensing between two agencies.

Retail License

Anyone selling tobacco to consumers needs a retail tobacco license issued through the Vermont Department of Liquor and Lottery. Applications go through the Department’s online portal and route to the local municipality for approval before state review.⁸ The municipal fee is $110, plus a separate state fee. Retailers who also sell e-cigarettes or vaping products need a tobacco substitute endorsement at an additional $50 municipal fee.⁹

Selling tobacco products or tobacco substitutes without the proper license is a misdemeanor. The fine is up to $200 for a first offense and up to $500 for each subsequent violation.⁵

Wholesale License

Wholesale dealers are licensed separately by the Vermont Department of Taxes. Retailers can only legally buy tobacco from a licensed wholesale dealer, which makes the wholesale license a gatekeeper for the entire supply chain.⁹ Wholesale applicants contact the Department of Taxes at misctaxes@vermont.gov for current requirements and any bonding obligations.¹⁰

Federal Minimum Age

Every retailer must comply with the federal minimum sale age of 21 for all tobacco and nicotine products, including e-cigarettes. ID verification is required, and states run random unannounced compliance checks each year under the federal Synar Amendment.¹¹

Filing and Payment

Licensed wholesale dealers file monthly tax returns through myVTax, the Department of Taxes’ online system.¹² A return covers all cigarettes, other tobacco products, and tobacco substitutes distributed during the previous month. Every licensed wholesale dealer files each month, even in months when no tax is owed.⁶

Returns and payment are due 15 days after the end of the reporting month. For product sold in January, the deadline is February 15. If the 15th falls on a weekend or holiday, the deadline moves to the next business day. Payments run through myVTax by ACH debit from a business bank account.⁶

Recordkeeping and Interstate Shipping

Federal regulations require tobacco dealers to keep all records, reports, and supporting documents for at least three years after the close of the calendar year in which they were created. The TTB can extend the period by another three years if it deems the extension necessary to protect revenue, and records must be available for inspection on request.¹³

Businesses that ship tobacco or vaping products across state lines take on additional obligations under the federal Prevent All Cigarette Trafficking (PACT) Act. The law requires registration with every state where shipments are delivered and monthly reporting of all interstate sales. Knowing violations are a federal felony punishable by up to three years in prison, and civil penalties start at $5,000 for a first violation and $10,000 for each subsequent one. The PACT Act’s definition of “cigarette” reaches roll-your-own tobacco and electronic nicotine delivery systems, so online vape sellers are covered.

1
Vermont General Assembly. Vermont Code 32 V.S.A. 7771 – Rate of Tax
2
Vermont Department of Taxes. Cigarette and Tobacco Tax Rates
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Vermont General Assembly. Vermont Code 32 V.S.A. 7702 – Definitions
4
Vermont General Assembly. Vermont Code 32 V.S.A. 7811 – Imposition of Tobacco Products Tax
5
Vermont General Assembly. Vermont Code Title 7 Chapter 40 – Tobacco Products
6
Department of Taxes. Electronic Cigarettes – Frequently Asked Questions
7
Congressional Budget Office. Increase Excise Taxes on Tobacco Products
8
Vermont Department of Liquor and Lottery. Tobacco License
9
Vermont General Assembly. Vermont Code 7 V.S.A. 1002
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Office of the Vermont Attorney General. Tobacco
11
U.S. Food and Drug Administration. E-Cigarettes, Vapes, and other Electronic Nicotine Delivery Systems (ENDS)
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Vermont Department of Taxes. Cigarette Tax and Tobacco Products Tax
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eCFR. 27 CFR 41.208 – Maintenance and Retention of Records and Reports