Delaware could increase its tobacco tax for the first time in nearly a decade, as lawmakers advanced a proposal to up the state’s tax on cigarettes by $1.50 a pack.
House Speaker Melissa Minor-Brown introduced SB 215 last year. The House Administrative committee heard a revised version of it, substituted this month.
“Raising the tax on all tobacco products is one of the most effective ways to prevent people from initiating tobacco use and encouraging people who use a tobacco product to quit,” Minor-Brown told the committee, citing data from the American Lung Association.
Both the original and substituted version of HB 215 propose increasing the tax on cigarettes from $2.10 to $3.60 per pack. The revised version sets a definition for premium cigars and keeps the tax at 30% of wholesale price. The bill suggests taxing vape products at 10 cents per fluid milliliter. And the measure adds a definition for “nicotine pouch” to Delaware code. The revised bill expands the definition of tobacco products, and it sets the tax rate at 40% of the wholesale price. If passed, new tax rates go into effect September 1, 2026.
The bill also increases licensure fees for businesses selling tobacco products, effective January 1, 2027.
Gov. Matt Meyer's proposed budget relies on a tobacco tax increase to bring in approximately $18.9 million in revenue for the state next year. Delaware law requires a three-fifths majority vote in both general assembly chambers to increase a state tax or levy.
To get this accomplished with Minor-Brown's bill, it needs to pass in the house with 25 votes and 13 in the senate.
HB 215 heads to the House floor, but not without opposition from stakeholders.
Convenience stores are consistently the largest retailers for tobacco products and cigarettes. According to NACS, more than 80% of tobacco products and cigarettes bought in the US were purchased from convenience stores in 2022.
John Quisito spoke on behalf of the National Convenience Distributors during committee against Minor-Brown's measure. He argued that Delaware has benefited from having lower tobacco taxes than neighboring states.
“As a result of the increase, cross-border purchases would reduce, harm Delaware retailers, and ultimately lead to loss of tax revenue in the state,” he said. “Same concerns apply to the proposed nicotine products and other 40% tax on tobacco products.”
This increase would keep Delaware’s tobacco tax cheaper than Maryland’s $5 –but make it more expensive than Pennsylvania’s $2.60 and New Jersey’s $3.
The CDC says smoking and tobacco use has broadly declined in the US, but e-cigarettes use has trended upwards recently. And Delaware isn't alone in looking to update its tobacco taxes.
Last year, Indiana increased its tax on cigarettes for the first time in nearly two decades, from $1 to $3. New Jersey also increased its tax on cigarettes by 30 cents a pack.
And the National Conference of State Legislatures said at least five states updated their tax code to include oral nicotine pouches last year.
