Illinois Hikes Tobacco & Vape Taxes to 45% in New Budget
Illinois’ new budget increases the effective tax rate on all tobacco products, including vapes and e-cigarettes, to 45% to boost state revenue.
Illinois lawmakers have passed a $55.2 billion budget for the new fiscal year, which incorporates increased taxes on tobacco products, including vapes and e-cigarettes. Governor J.B. Pritzker lauded the agreement as the state’s seventh consecutive balanced budget, emphasizing investments in education, healthcare, and public safety.
According to Capitol News Illinois, a key revenue-generating measure in the new budget is an increase in the effective tax rate on all tobacco products to 45%. This rate explicitly includes vaping products and e-cigarettes, subjecting them to the same higher tax level as traditional tobacco. This move aims to generate additional state revenue and potentially discourage the use of these nicotine products by making them more expensive for consumers.
The budget, which passed along party lines, faced criticism from Republicans who argued against the spending and tax increases, claiming they were excluded from negotiations and that Democrats used maneuvers to artificially balance the budget. House Minority Leader Tony McCombie accused Democrats of prioritizing “political pay raises” and “pork projects” over structural reforms.
In addition to the tobacco and vape tax hike, the budget includes other revenue measures such as a new tax on online sports bets and a change requiring companies with over $100,000 in state business to assess sales taxes, even without a physical presence in Illinois. The increased taxes on tobacco and vaping products are part of a broader strategy to fund state programs, including childcare assistance and grants for students.
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