Cigarette Tax and Cigars and Tobacco Products Tax
June 2006
House Bill 5, enacted by the 79th Texas Legislature in the recent special session, increases the excise tax on cigarettes weighing three pounds or less per thousand to $1.41 for a pack of 20 cigarettes and to $1.76 for a pack of 25. House Bill 5 also increases the excise tax on tobacco products other than cigars (smoking and chewing tobacco and snuff) to 40 percent of the manufacturer's list price, exclusive of any trade discount, special discount, or deal. Both increases become effective January 1, 2007.
House Bill 2, also enacted in the same special session, allocates the additional revenue collected from the cigarette tax and other tobacco products tax increases to the property tax relief fund. The bill is effective September 1, 2006.
Cigarettes
On January 1, 2007, all cigarette distributors, wholesalers, and retailers must immediately inventory their cigarette packages and any unused stamps of the old denomination and file a report of the inventory with the Comptroller on or before January 31, 2007. When filing their inventory report, distributors, wholesalers, and retailers having 2000 or more cigarettes in packages with stamps of the old denomination must pay the increased additional tax due by cashier's check, electronic funds transfer, or by any other method of payment authorized by the Comptroller.
Prior to January 1, 2007, the Comptroller's office will mail to each cigarette distributor, wholesaler, and retailer a report form to assist them with reporting the inventory information. Each distributor, wholesaler, and retailer must keep a copy of the completed inventory report form and, if remitting a payment, must be able to document the method of payment used.
Other Tobacco Products
The new tobacco products excise tax rate of 40 percent of the manufacturer's list price, exclusive of any trade discount, special discount, or deal, applies to all smoking and chewing tobacco and snuff products (not cigars) distributors receive on and after January 1, 2007. The monthly distributor's report that the Comptroller mails to distributors each month will include the new excise tax rate starting with the January 2007 report. The report and any required payment are due to the Comptroller's office on or before February 28, 2007.
Need More Assistance? Email us at tax.help@cpa.state.tx.us. Call us toll free. Visit one of our local field offices. Special Notice
(06/2006)