Federal and State Cigarette Excise Taxes—United States, 1995–2009

May 22, 2009 / Vol. 58 / No. 19

On April 1, 2009, the largest federal tobacco excise tax increase in history went into effect, increasing the excise tax on cigarettes from 39 cents to $1.01 per pack. This tax increase brought the combined federal and average state excise tax for cigarettes more than $2 per pack, achieving the Healthy People 2010 objective.
The federal cigarette excise tax increased from 24 cents per pack in 1995 to $1.01 per pack in 2009 (a 321% increase).
The average (mean) state cigarette excise tax increased from 33 cents in 1995 to $1.20 per pack in 2009 (a 267% increase).
When the study was conducted South Carolina had the lowest state cigarette excise tax at 7 cents per pack, while New York had the highest state cigarette excise tax at $2.75 per pack.
While the average excise tax among tobacco-growing states has increased by a greater percentage (by 444% since 1995) when compared to non-tobacco growing states (by 264% since 1995), the tax rates in these and other bordering southeastern states are substantially lower than the rest of the country.
- States with the lowest tax-rates have fewer tobacco-control policies, such as comprehensive statewide smoke-free laws.

Cigarette smoking and exposure to secondhand smoke results in approximately 443,000 premature deaths in the United States, 5.1 million Years of Potential Life Lost, and $97 billion in productivity losses annually.
The Task Force on Community Preventive Services recommends excise tax increases as an effective policy intervention to raise the price of tobacco products to prevent initiation of adolescents and young adults, and to reduce cigarette consumption and increase the number of smokers who quit.
A 10 percent increase in the price of cigarettes is estimated to reduce consumption by 4 percent.
The Institute of Medicine recommends that states dedicate a portion of tobacco excise tax revenue to fund state tobacco control programs at levels recommended by CDC in Best Practices for Comprehensive Tobacco Control Program—2007.
Excise tax increases are more effective and have a greater public health impact when combined with other comprehensive tobacco control programs that reduce the prevalence of smoking through evidence-based policy tools.
Because low income groups are more responsive to price increases, increasing the price of cigarettes through tax increases can diminish socioeconomic smoking disparities as low-income smokers reduce cigarette consumption by a percentage greater than higher-income smokers.