Indiana Cigarette Tax Revenue Soars 112% After $2 Per Pack Hike

Indiana Cigarette Tax Revenue Increase

Indiana’s state cigarette tax revenue more than doubled in July, soaring by 112.7% compared to the same month last year, following a significant tax increase. Data from the State Budget Agency shows Indiana collected $40.2 million in cigarette taxes in July, up from $18.9 million in July 2024.

This surge comes after the Republican-controlled General Assembly and Governor Mike Braun approved a 200% tax hike, raising the state’s cigarette tax from $1 to $3 per pack. The increase, which also included higher taxes for cigars, pipes, and vape products, was implemented to address growing Medicaid expenses and a challenging revenue forecast. The new tax is projected to raise an additional $850 million over the next two years from the approximately 20% of Hoosier adults who smoke.

The July tax haul exceeded state budget officials’ expectations by $600,000. This additional revenue helped Indiana surpass its total July revenue target by $50.2 million, offsetting shortfalls in personal and corporate income tax collections for the month.

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