Modifies tax rate on certain nicotine products.*

2024-2025 Regular Session Introduced by Paul Sarlo and 1 co-sponsor

Raises taxes on cigarettes, liquid nicotine, and container e-liquid, with inventory reporting and $2M to Health Care Subsidy Fund.

Substituted by A5805

#salestax

Purpose

S 4659 raises state excise taxes on cigarettes, liquid nicotine, and container e-liquid (vape liquids) as part of the Governor’s Fiscal Year 2026 budget recommendations. It also dedicates a portion of new vapor-product tax revenue to the State’s Health Care Subsidy Fund and establishes inventory-reporting and transitional payment requirements for sellers.

Key provisions

Cigarette tax

Increases the cigarette tax from $0.135 to $0.15 per cigarette.
Equivalent per-pack change: from $2.70 to $3.00 for a 20-cigarette pack.

Liquid nicotine (bulk/liquid form)

Raises the tax from $0.10 to $0.30 per fluid milliliter, based on manufacturer-listed volume.
Compensating use tax provisions are adjusted to the same $0.30/mL rate where applicable.

Container e-liquid (retail vape cartridges/bottles)

Raises the tax from 10% to 30% of the listed retail sale price.
Seller collection and personal liability rules for collection remain in place; the Director of the Division of Taxation may prescribe payment methods and record requirements.

Inventory reporting and transitional tax payments

Licensed retail dealers, distributors, and wholesale dealers must file sworn returns (on director-provided forms) showing inventories as of 12:01 a.m. on the effective date and pay the incremental tax due on those inventories.
Filing/payment deadline is statutorily “on or before the first day of the second month after the effective date” (with the act’s effective date specified below).

Dedication of revenues

$2 million of revenue collected from the taxes on liquid nicotine and container e-liquid is to be dedicated to the Health Care Subsidy Fund (administered by the Department of Health).

Who is affected

Consumers: likely higher retail prices for cigarettes and vaping products.

Retail dealers, distributors, wholesalers: must comply with new tax rates, file inventory returns, and pay additional tax on on-hand inventories as of the effective date.

State finances and health programs: increased tax receipts and a $2 million dedicated deposit to the Health Care Subsidy Fund.

Timing and procedure

Effective date: August 1, 2025 (the bill specifies this effective date).

Inventory-return filing deadline: on or before the first day of the second month after the effective date (statutory wording; if effective Aug 1, 2025, this would fall on Oct 1, 2025).

Legislative status: Introduced February 10, 2025; reported by Senate Budget & Appropriations Committee (SCS) June 26, 2025; substituted by Assembly bill A5805 on June 30, 2025.

Fiscal impact: Not specified in the committee statement (fiscal information unavailable in the document).

Sponsors / Related bills

Primary sponsor: Sen. Brian Kavanagh; many Senate cosponsors listed.

Related/companion: A4877 and A5805 (A5805 substituted for S4659).

Note: The bill distinguishes liquid nicotine (taxed per mL) from container e-liquid (taxed as a percentage of retail price); the liquid-nicotine tax statute explicitly excludes container e-liquid.

Bill