Starting July 1st, 2025, Hoosiers who smoke or vape will face a sharp cost increase due to one of Indiana’s most significant tobacco tax hikes ever instituted. Passed in the spring 2025 state budget (House Bill 1001), the measure aims to tackle a $2–$2.4 billion budget shortfall, while aiming to reduce tobacco use statewide, as well.
What’s Changing:
• Cigarettes: The state tax jumps $2 per pack, raising the total to $2.995. With retail markup, expect most packs to cost $7–$9, up from $5–$6, depending on brand and retailer.
• Other Tobacco Products (OTP): Taxes on cigars, chewing tobacco, and moist snuff will rise proportionally. The wholesale tax may increase from 24% to 30%, and moist snuff could go from $0.40 to $0.50 per ounce, pending final confirmation.
• Vaping Products: Taxes on e-cigarettes, including closed-system cartridges (e.g., JUUL pods) and open-system e-liquids, will nearly double, likely from 15% to 30–31%, with some proposals suggesting up to 53% for cartridges. Frequent and younger vapers will be hit hardest.
The tax is expected to generate $180–$800 million over two years, with much of the revenue bolstering Indiana’s Medicaid program, strained by smoking-related health costs, many argue.
A Divided Response
Health advocates praise the tax as a win-win: it funds critical services and curbs tobacco use, particularly among teens. Some research shows a 10% price hike reduces youth smoking by about 7%, and officials estimate 32,000 Hoosiers could quit, saving $492 million in future healthcare costs.
Critics, however, call it a regressive “punishment tax” that unfairly targets low-income smokers—67% of whom earn under $50,000—and rural retailers. With Ohio’s cigarette tax at just $1.60 per pack, border shops may lose customers to cheaper alternatives across the state line.
Local Impact
In Indiana, where tobacco use exceeds the national average (Indiana’s adult smoking rate is 17.3% vs. 11.5% nationally), the impact will sting. A pack-a-day smoker faces an extra $60 monthly. Local vape shops may raise prices or risk shrinking margins, challenging certain small businesses in rural economies.
Bottom Line
Come July 1st, 2025, smoking, chewing, or vaping in Indiana will cost more. The state calls it a public health victory; critics see it as a cash grab. One thing’s clear, though: Hoosiers’ wallets will take the hit.
IT’S CALLED THEFT. NOT TAX!
Plain and simple it is no doubt unfair taxation taxing a selected group based on unproven opinions
What a crock. 25% of Hoosiers of middle and low income people will pay this with little of no representation in Ind. politics. An easy grab for elected politicians who spend more money then they ever bring in. And just how much of this money goes to assist smokers? Zip. Tobacco tax, gas taxes it just never ends here.