Vaping has become a popular alternative to smoking, and in light of that, some states have imposed higher taxes on vaping and ENDS in order to discourage people from taking it up. Each U.S. state has its own policies around vaping and electronic nicotine delivery systems (ENDS), and that includes tax policies. 

So, what do you need to know about vaping and taxes? Let’s answer some common questions.

How many states tax vaping?

Right now, vaping is taxed in 31 states and the District of Columbia. 

How is vaping taxed?

States tax vaping in various ways:

• By manufacturer
• Wholesale
• By retail price
• By volume
• With different rates for open and closed tank systems

Which states have the highest and lowest vaping taxes?

When it comes to wholesale, Minnesota has the highest vaping tax at 95%, but Vermont is second with a 92% tax. The most lenient is Connecticut with a 10% wholesale tax, and Wyoming with a 15% wholesale tax.

Other states tax by mL. Delaware, Kansas, North Carolina, and Wisconsin all charge a tax of $0.05 per mL, while Louisiana has the highest per mL rate at $0.15. 

Why do states tax vaping?

Many states tax cigarettes in order to discourage people from smoking, and the reasoning behind vaping taxes is similar. 

But while the harmful effects of vaping, as opposed to smoking cigarettes, still haven’t been studied in full, many see vaping as a less harmful alternative to cigarettes, and some cigarette smokers switch to vaping in an attempt to get themselves off cigarettes. 

From one perspective, then, taxing vapor products is bad because it can actually discourage cigarette smokers from quitting. In fact, in Minnesota, a 95% excise tax on vapor products ended up deterring at least 32,400 cigarette smokers from switching over to vaping.