Abstract
Background:
Oral nicotine pouches (ONPs) are a rapidly growing segment of the nicotine market in the United States (US), yet there is no comprehensive assessment of state taxation of these products. Understanding how states tax ONPs is critical for informing tobacco control policies and public health strategies.
Methods:
We collected ONP excise tax data by directly contacting state tax departments or through requests under state freedom of information acts. For each state, we determined whether ONPs containing tobacco-derived nicotine (TDN) and/or non-tobacco nicotine (NTN) are taxed and identified the applicable tax structure and rate. Tax forms were categorized as specific taxes ($/ounce or $/package) or ad valorem taxes (% of price).
Results:
As of December 2025, no federal excise tax applies to ONPs. Twenty-nine states and the District of Columbia do not tax ONPs, while 21 states impose excise taxes. Of these 21 states, 7 states use specific taxes, and 14 apply ad valorem taxes. Fifteen states tax ONPs containing both TDN and NTN, whereas five tax only TDN-containing products while staying silent on NTN products. Nevada is unique in taxing NTN-containing ONPs while expressly exempting TDN products. Ad valorem rates range from 10% to 95%, and specific taxes range from $0.50 per ounce to $3.08 per can.
Conclusions:
This study reveals substantial variation in state-level ONP tax structures and rates. The findings establish a foundation for future research evaluating how ONP taxation affects public health outcomes.
Background
Oral nicotine pouches (ONPs) are an emerging segment of the nicotine product market. In the United States (US), between July 2021 and May 2024, monthly sales more than tripled, from 327 million to over 1.05 billion units.[1] ONPs are now used by an estimated 480,000 adolescents and 3.9 million adults.[2–4] The latest report from the US Centers for Disease Control and Prevention (CDC) shows a decline in e-cigarette use among US high school students, dropping from 11.3% in 2021 to 7.8% in 2024.[5] In contrast, ONP use has more than doubled during the same period, rising from 1.1% to 2.4%.[5] These trends highlight the growing presence of ONPs in the nicotine market and underscore the importance of understanding how these products are taxed across states.
Tobacco excise taxes are among the most effective policy tools for reducing tobacco use, [6–9] and are widely applied to cigarettes, e-cigarettes, and smokeless tobacco. While there are no ONP taxes at the federal level, whether ONPs are taxed by states and how these taxes are designed in terms of bases and rates are unclear. This absence of state-level ONP tax data presents a barrier for tobacco taxation research and evidence-based policymaking. Moreover, ONPs are a type of product for which manufacturers have widely introduced non-tobacco nicotine (NTN, also referred to as synthetic nicotine) products alongside traditional tobacco-derived nicotine (TDN) products. Companies often market NTN products as “tobacco-free”, a term that may influence risk perceptions and product appeal and shape future use.[10] This marketing term may also play a role in whether ONPs with NTN are taxed because not all states define tobacco and nicotine products (TNP) broadly enough to capture NTN products. For example, Kansas, Texas, and Wyoming did not have a definition of NTN products and, as a result, do not tax ONPs containing NTN. In contrast, states such as California, Louisiana, Illinois, and Maine tax ONPs containing NTN because such products are included within their definitions of taxable TNP. Therefore, collecting ONP tax details is the best way to address the current evidence and data gaps. This study will compile the first state-level ONP tax database to support and advance future research.
Methods
We collected data on ONP excise taxes by taking several steps. First, we directly contacted state tax departments. Specifically, we asked, 1) “Whether your state imposes excise taxes on ONPs (Yes or no)”; 2) “If there are ONP taxes, what are the tax bases and rates? (e.g., $0.05 per pouch, or 20% of wholesale or retail price)”; 3) “Have the tax base and rates for ONPs changed since 2016 (2016 is the first year in which the literature documents the entry of ONPs into the US marketplace[11, 12])? If yes, can you provide us with the time of tax changes and historical tax rates for ONPs?” and 4) “Does the ONP tax vary by whether the ONPs contain tobacco-derived nicotine or non-tobacco nicotine?” Tax base includes specific taxes, which are assessed based on weight ($/ounce) or unit ($/package), and ad valorem taxes, which are assessed as a percentage of the wholesale or manufacturer's price (% of price). If the state tax agency did not respond to our email inquiry, we next submitted a request to obtain the relevant information under that state’s freedom of information act (FOIA).
Finally, for the states for which we received no response to our inquiry to the state tax department and no response to our FOIA request, we used Westlaw’s AI Jurisdictional Survey to collect laws. The Westlaw AI Jurisdictional Survey is a legal research tool within Westlaw that uses structured queries to synthesize state-specific statutory and regulatory information across jurisdictions. The initial query used was “what is the definition of a “tobacco product” for the purpose of taxation?” One team member with legal training (PJZ) then collected the relevant laws from Westlaw, and the team analyzed those laws to answer the four questions posed to states in open records act requests. To ensure accuracy, we did not rely solely on the AI-generated summaries. Instead, all information obtained from Westlaw was cross-checked against primary legal sources, including state statutes, administrative codes, and enacted legislation. We also conducted searches of these states’ taxation agencies’ websites and conducted searches for state bills on ONPs to supplement the information available in Westlaw’s database. To validate our dataset, we systematically compared our data with information from the National Conference of State Legislatures (NCSL) and the Federation of Tax Administrators (FTA).[13, 14] Where discrepancies were identified, we conducted additional verification by following up with state agencies. This process resulted in our finalized dataset on ONP taxes.
Results
Among all states, 34 responded to our email inquiries, and 13 responded to FOIA requests. For the remaining 4 states, we conduct Westlaw and state legislative bill searches. As of December 2025, no federal excise tax has been imposed on ONPs. Among the 50 states and the District of Columbia (DC), 29 states and DC do not levy excise taxes on ONPs (Figure 1). Of the 21 states that do impose such taxes, 7 apply specific taxes, whereas 14 apply ad valorem taxes. Among states using specific taxes, 3 use weight-based taxes and 4 use unit-based taxes. Among states applying ad valorem taxes, 11 assess taxes based on the wholesale price and 3 based on the manufacturer’s price. Regarding product type, 15 states tax ONPs containing both TDN and NTN. Five states tax only TDN-containing ONPs. Nevada is the only state that taxes NTN-containing ONPs while exempting those containing TDN.
Figure 1:
Summary of Oral Nicotine Pouch Excise Taxes in the US, December 2025
Table 1 summarizes state definitions of tobacco and nicotine products (TNP) and the corresponding tax treatment of oral nicotine pouches (ONPs) containing tobacco-derived nicotine (TDN) and non-tobacco nicotine (NTN). Considerable heterogeneity exists across states in both statutory definitions and tax applicability. Sixteen states define TNP broadly enough to include NTN, whereas the remaining states do not explicitly include NTN in their statutory definitions. Notably, although Iowa and South Carolina define NTN as an alternative nicotine product, ONPs are not subject to excise taxes in these states. In contrast, Florida, North Carolina, and Rhode Island do not explicitly define NTN; however, ONPs containing NTN are nonetheless taxed, either through inclusion within (alternative) nicotine products or through administrative classification based on product form. State-level ONP excise tax structures and rates as of December 2025 are presented in Table 2. As can be seen in Table 2, the ad valorem tax rates range from 10% of the manufacturer's price in Kansas to 95% of the wholesale price in Minnesota. The specific tax ranges from $0.5/ounce in Indiana to $3.08/can in Vermont.
Table 1:
State Tobacco and Nicotine Product (TNP) Definitions and Taxation of ONPs with TDN and NTN
| Does the TNP definition include NTN? | Are ONPs with TDN considered as TNP and taxed? | Are ONPs with NTN considered as TNP and taxed? | |
|---|---|---|---|
| Alabama | No | No | No |
| Alaska | No | No | No |
| Arizona | No | No | No |
| Arkansas | No | No | No |
| California | Yes | Yes | Yes |
| Colorado | Yes | Yes | Yes |
| Connecticut | No | Yes | No |
| Delaware | No | No | No |
| District of Columbia | No | No | No |
| Florida | No1 | Yes | Yes |
| Georgia | No | No | No |
| Hawaii | No | No | No |
| Idaho | No | No | No |
| Illinois | Yes | Yes | No |
| Indiana | Yes | Yes | Yes |
| Iowa | Yes2 | No | No |
| Kansas | No | Yes | No |
| Kentucky | No | No | No |
| Louisiana | Yes | Yes | Yes |
| Maine | Yes | Yes | Yes |
| Maryland | Yes | Yes | Yes |
| Massachusetts | No | No | No |
| Michigan | No | No | No |
| Minnesota | Yes | Yes | Yes |
| Mississippi | No | No | No |
| Missouri | No | No | No |
| Montana | No | No | No |
| Nebraska | No | No | No |
| Nevada | Yes | No | Yes |
| New Hampshire | Yes | Yes | Yes |
| New Jersey | Yes | Yes | Yes |
| New Mexico | Yes | Yes | Yes |
| New York | No | No | No |
| North Carolina | No3 | Yes | Yes |
| North Dakota | No | No | No |
| Ohio | No | No | No |
| Oklahoma | No | No | No |
| Oregon | No | No | No |
| Pennsylvania | No | No | No |
| Rhode Island | No4 | Yes | Yes |
| South Carolina | Yes2 | No | No |
| South Dakota | No | No | No |
| Tennessee | No | No | No |
| Texas | No | Yes | No |
| Utah | Yes | Yes | Yes |
| Vermont | Yes | Yes | Yes |
| Virginia | No | No | No |
| Washington5 | No | No | No |
| West Virginia | No | No | No |
| Wisconsin | No | No | No |
| Wyoming | No | Yes | No |
Note:
Florida does not explicitly define synthetic nicotine; however, its statutory definition of “nicotine products” includes any product containing nicotine, thereby implicitly encompassing products containing synthetic nicotine.
Non-tobacco nicotine is defined as alternative nicotine product, however, ONPs are not subject to excise taxes.
North Carolina does not provide a standalone definition of synthetic nicotine; however, the statute defines “alternative nicotine products” to include nicotine “whether natural or synthetic,” thereby implicitly encompassing synthetic nicotine. Alternative nicotine products are taxed regardless of whether the nicotine is derived from tobacco or not.
Although Rhode Island does not explicitly define synthetic nicotine in statute, tax authorities indicated that products containing synthetic nicotine are taxed based on product form. Because oral nicotine pouches are not cigarettes, they are effectively taxed as other tobacco products, similar to products containing tobacco-derived nicotine.
Effective January 1, 2026, ONPs are taxable under the Tobacco Products Tax (at 95% of the taxable sales price) because they contain nicotine, whether derived from tobacco or synthetic.
Table 2:
Oral Nicotine Pouch (ONP) Excise Tax Structure and Rates as of December 2025
| State | Tax Structure | Tax Rate | Initial Effective Dates1 |
|---|---|---|---|
| Alabama | — | — | — |
| Alaska | — | — | — |
| Arizona | — | — | — |
| Arkansas | — | — | — |
| California | Ad valorem taxes | 54.27% of the wholesale price | 04/01/2016 |
| Colorado | Ad valorem taxes | 56% of the manufacturer’s price | 01/01/2021 |
| Connecticut | Weight—based specific taxes | $3.0/ounce | 10/01/2019 |
| Delaware | — | — | — |
| District of Columbia | — | — | — |
| Florida | Ad valorem taxes | 85% of the wholesale price | 01/01/2016 |
| Georgia | — | — | — |
| Hawaii | — | — | — |
| Idaho | — | — | — |
| Illinois2 | Ad valorem taxes | 45% of the wholesale price | 01/01/2016 |
| Indiana | Weight—based specific taxes | $0.5/ounce | 01/01/2022 |
| Iowa | — | — | — |
| Kansas | Ad valorem taxes | 10% of the manufacturer’s price | 01/01/2016 |
| Kentucky | — | — | — |
| Louisiana | Ad valorem taxes | 20% of the manufacturer’s price | 01/01/2016 |
| Maine | Unit—based specific taxes | $2.02 per container if in a package containing less than one ounce; $2.02 per ounce if in a package containing one ounce or more | 08/09/2024 |
| Maryland | Ad valorem taxes | 60% of the wholesale price | 07/01/2020 |
| Massachusetts | — | — | — |
| Michigan | — | — | — |
| Minnesota | Ad valorem taxes | 95% of the wholesale price | 01/01/2016 |
| Mississippi | — | — | — |
| Missouri | — | — | — |
| Montana | — | — | — |
| Nebraska | — | — | — |
| Nevada | Ad valorem taxes | 30% of the wholesale price | 01/01/2020 |
| New Hampshire | Ad valorem taxes | 65.03% of the wholesale price | 01/01/2016 |
| New Jersey | Ad valorem taxes | 30% of the wholesale price | 09/29/2018 |
| New Mexico | Ad valorem taxes | 25% of the wholesale price | 01/01/2016 |
| New York | — | — | — |
| North Carolina | Unit—based specific taxes | $0.10/container containing up to 20 units, and $0.005/unit for any amount in a container containing over 20 units | 07/01/2025 |
| North Dakota | — | — | — |
| Ohio | — | — | — |
| Oklahoma3 | — | — | 01/01/2015 |
| Oregon | — | — | — |
| Pennsylvania | — | — | — |
| Rhode Island | Ad valorem taxes | 80% of the wholesale price | 10/01/2025 |
| South Carolina | — | — | — |
| South Dakota | — | — | — |
| Tennessee | — | — | — |
| Texas | Unit—based specific taxes | $1.46 per package weighing less than 1.2 oz | 01/01/2016 |
| Utah | weight—based specific taxes | $1.83/ounce | 07/01/2021 |
| Virginia | — | — | — |
| Vermont | Unit—based specific taxes | $3.08 per package weighing less than 1.2 oz | 01/01/2016 |
| Washington | — | — | — |
| West Virginia | — | — | — |
| Wisconsin | — | — | — |
| Wyoming | Ad valorem taxes | 20% of the wholesale price | 01/01/2016 |
Note:
When the initial effective date is coded as 01/01/ 2016, it indicates that ONPs were subject to taxation upon their entry into the US market.
Prior to July 1, 2025, Illinois taxes ONPs on a specific tax basis ($0.30/ounce).
Oklahoma imposed a 60% excise tax on the manufacturer’s price from January 1, 2015, to June 30, 2021, before eliminating the tax on July 1, 2021.
Discussion and Conclusion
In this study, we compiled the first state-level database of excise taxes on ONPs in the US, filling an important gap in tobacco regulatory literature. Overall, we found that in states (e.g., Illinois, Louisiana, Vermont, Utah, Minnesota, Indiana, California, Maine, and Kansas) that tax ONPs, ONP excise taxes generally resemble those applied to traditional smokeless tobacco products (e.g., moist snuff). This is not surprising, as these states classify ONPs as other (alternative) tobacco products and therefore tax them using the same structures and rates.
Despite these similarities, our findings highlight substantial variation across states in both tax structure (bases and rates) and the types of ONPs subject to taxation. Some states apply specific taxes based on weight or unit, while others rely on ad valorem taxes tied to wholesale or manufacturer prices. These distinctions matter, as product weight, pouch count, and pricing strategies differ across brands and could lead to inconsistent tax burdens across states and across products within the same state. Moreover, states differ in whether taxes apply to products containing TDN, NTN, or both, creating potential regulatory loopholes and opportunities for tax avoidance. Generally speaking, in states that tax ONPs containing TDN but not NTN, this distinction typically arises because products containing NTN (synthetic nicotine) are not included in statutory definitions of TNP. For example, ONPs containing TDN are explicitly considered tobacco products in Texas under Tax Code Section 155.001(15) and are therefore subject to the tobacco products tax. However, the tax treatment of ONPs containing NTN remains unresolved due to pending litigation before the Supreme Court of Texas. Consequently, ONPs with NTN in Texas are currently untaxed. In Nevada, ONPs containing NTN are classified as alternative nicotine products and are taxed as other tobacco products. In contrast, ONPs containing TDN are not currently taxable as other tobacco products due to the exemption within the statutory definition of alternative nicotine products (NRS 370.008). Beginning January 1, 2026, Nevada expands the definition of “other tobacco product” to include any tobacco product, vapor product, alternative nicotine product, or any product made or derived from tobacco, excluding cigarettes. As a result, all oral nicotine pouches will be subject to a 30% excise tax on the wholesale price. Taken together, these differences suggest that there is no consensus on how best to design the tax structures for ONPs.
We also examined the potential for regional patterns in ONP taxation, including both the presence of excise taxes and the type of tax structure (e.g., specific vs. ad valorem). However, we did not observe clear or consistent regional clustering in either the adoption or design of ONP taxes. Instead, tax policies appear to vary idiosyncratically across states. Despite the lack of clear geographic clustering, cross-border purchasing and policy diffusion remain important considerations for future research.
This study establishes a foundation for future work. Our newly developed dataset can help researchers, policymakers, and regulatory agencies compare ONP taxation and its effects across states. Given the recent increases in ONP use, particularly among younger users, understanding state-level ONP taxes and their potential effects provides a foundation for future research. Future studies should examine how ONP taxes influence retail prices, sales, and substitution with other nicotine products, and evaluate the potential impact of tax policies on public health outcomes.
What is already known on this topic:
Oral nicotine pouches (ONPs) are an emerging nicotine product category in the United States.
State tobacco and nicotine tax policies vary widely across products and jurisdictions.
The tax treatment of ONPs containing tobacco-derived nicotine and non-tobacco nicotine differs across states.
What this study adds:
Provides the first comprehensive dataset of state-level ONP excise taxes in the United States.
Documents variation in tax structure, rates, and treatment of tobacco-derived versus non-tobacco nicotine ONPs.
How this study might affect research, practice or policy:
Establishes a foundation for future research on how ONP taxation affects public health outcomes.
Informs policymakers about existing variations in state ONP tax approaches.
Funding statement:
This study was funded by the National Cancer Institute of the National Institutes of Health and Food and Drug Administration U54CA287392 OSU Tobacco Center of Regulatory Science (PI: Wagener and Shields). The content is solely the responsibility of the authors and does not necessarily represent the official views of the National Institute of Health or the Food and Drug Administration.
Footnotes
Competing interests:
None declared.
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