Bill
SB 1314
SB 1314: shifts tobacco tax to 36% of cost (actual or average), expands remote-seller collection, and caps cigars at $0.75 each (2026–2028), effective 1/1/2026.
Status & Sponsors
- Bill number: SB 1314
- Title: Tobacco Products Tax Act — Remote Sellers
- Introduced: Jan 28, 2025 (filed by Sen. Cristina Castro)
- Co-sponsor added: Sen. Sara Feigenholtz (Aug 13, 2025)
- Related/companion bill: HB 995
- Effective date specified in bill: January 1, 2026
Purpose / Intent
- To modernize and clarify taxation of tobacco products by: (1) requiring certain remote retail sellers to collect and remit Illinois tobacco product taxes, and (2) changing the tax base and calculation method for many tobacco products beginning January 1, 2026. The measure also provides a temporary per‑cigar tax cap.
Key provisions and changes
- Remote sellers: The bill requires remote retail sellers that meet specified sales criteria (economic nexus/sales thresholds referenced but not shown in the excerpt) to collect and remit the tax imposed by the Tobacco Products Tax Act of 1995. This extends collection obligations to certain out‑of‑state or online sellers who sell into Illinois.
- New tax basis (effective Jan 1, 2026): The tax on taxable tobacco products is set at 36% of either:
- (i) the actual cost paid by a distributor or remote retail seller for the stock keeping unit (SKU); or
- (ii) if documentation of actual cost is unavailable due to matters beyond the distributor or seller's control, the “actual cost list” (defined as the average actual price paid for the SKU during the preceding calendar year).
- Temporary cigar cap: From January 1, 2026 through December 31, 2028, the tax per cigar (other than a “little cigar”) shall not exceed $0.75 per cigar.
- Definitions and structure: The bill adds/rewrites multiple definitions (e.g., “actual cost,” “actual cost list,” “cigar,” “contraband little cigar,” “electronic cigarette,” “distributor,” and others) and amends several sections of the Tobacco Products Tax Act of 1995 (sections 10‑5, 10‑10, 10‑24 (new), 10‑25, 10‑30, 10‑35, 10‑37, 10‑38, 10‑45, and 10‑50).
- Effective date: The tax changes and remote seller obligations take effect January 1, 2026.
Who is affected
- Remote retail sellers and marketplace sellers who meet the bill’s sales criteria — they would be newly obligated to register, collect and remit Illinois tobacco taxes. (Exact threshold language not included in the excerpt; check full text.)
- Distributors and wholesalers — new documentation requirements and tax‑calculation changes (use of actual cost or actual cost list).
- Brick‑and‑mortar retailers — may see altered market competition if remote sellers must collect taxes.
- Consumers — final retail prices for tobacco products could rise or fall depending on how the new 36% ad valorem tax compares to current per‑unit or other tax structures; premium products may be affected differently than low‑cost products.
- State finances — potential revenue impact: moving to a percentage‑of‑cost tax and extending collection to remote sellers can increase compliance and revenue, but the per‑cigar cap (≤ $0.75 through 2028) could reduce revenue from high‑priced cigars.
Procedural / timeline notes
- Introduced Jan 28, 2025; effective January 1, 2026 for the tax changes. The excerpt does not show final legislative disposition; check the legislative history (committee referrals, votes) for current status.
- Some important specifics are missing from the excerpt (notably the remote seller sales thresholds and enforcement/penalty provisions). Review the full enrolled bill text or legislative analyses for implementation details and fiscal notes.
Recommendation for readers
- For compliance actions (sellers/distributors): obtain the full bill text to confirm nexus thresholds, registration deadlines, reporting formats, recordkeeping and penalties.
- For fiscal analysis: consult the bill’s fiscal note or Department of Revenue analysis to estimate revenue impact and administrative costs.
Compiled from official sources — confirm details with the bill’s official record.
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