Nebraska to Impose 20% Wholesale Tax on Nicotine Products

The Nebraska Legislature has taken a significant step towards regulating nicotine and “nicotine-like” products by advancing Legislative Bill 9, which proposes a 20% wholesale excise tax on alternative nicotine products. The bill, introduced by State Sen. Jana Hughes of Seward, aims to define “alternative nicotine products” and “nicotine analogues” in state law, creating an “umbrella” approach to capture future products without requiring specific legislation for each new product.

The bill, which passed the first round of debate with a 41-0 vote, targets products like Zyn nicotine pouches and aims to curb youth usage of these drugs while generating revenue for the state. Currently, these products are subject to the standard 5.5-cent statewide sales tax and local sales taxes. If LB 9 is passed, it would take effect on January 1, 2026, and is estimated to bring in $3.4 million by June 30, 2027.

Sen. Hughes has been actively pushing for increased taxes and regulations on nicotine products, particularly vaping, since her election to the Legislature. She has introduced another bill this year, LB 712, which proposes changing the state excise tax on vapes to 40% wholesale, effective October 1, 2025. This bill is projected to generate $56.4 million by mid-2027.

Read moer: Nebraska Proposes 20% Tax on Vapes and Nicotine Alternatives

The revenue generated from these bills could be crucial in addressing the state’s projected budget shortfall and funding Sen. Hughes’ priority bill, LB 303, which aims to lower property taxes by allocating more state dollars to K-12 schools.

During the debate, Sen. Jane Raybould of Lincoln proposed an amendment to switch to a weight-based tax, similar to the tax on snuff, at 44 cents per ounce. She argued that the 20% wholesale tax could result in a 700% tax increase on some products, which she deemed “regressive.” However, Sen. Hughes countered that a weight-based tax could incentivize companies to concentrate nicotine, potentially harming children.

Sen. Raybould’s amendment failed with a 24-5 vote, with only a few senators supporting the change. It was revealed during the debate that the amendment was brought forward on behalf of a tobacco industry lobbyist, although Sen. Raybould declined to share the lobbyist’s identity.

LB 9, one of the two General Affairs Committee priority bills this year, will face two more rounds of debate before potentially becoming law. As the Legislature continues to address the challenges posed by nicotine and “nicotine-like” products, it remains to be seen how these efforts will impact public health, youth usage, and state revenue in the coming years.

News Source: Lawmakers advance bill to tax ‘nicotine-like’ products in Nebraska, such as ‘Zyn’ pouches

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Matthew Ma

Marketing at Ecigator

With over a decade of experience in the e-cigarette industry, Matthew Ma is a seasoned expert in both the manufacturing and usage aspects of vaping products. His extensive background has provided him with a deep understanding of the intricacies and evolving dynamics of e-cigarettes.