Bill > SSB3145

Introduced Session

This bill relates to the taxation of cigarettes, tobacco products, vapor products, and consumable hemp products, and makes appropriations to the department of health and human services and the department of justice. DIVISION I —— CIGARETTE TAXATION. The bill raises the cigarette tax from 6.8 cents per cigarette to 10.05 cents S.F. _____ per cigarette. The overall tax on a pack of cigarettes (20 cigarettes) goes from $1.36 to $2.01. The bill also raises the tax on loose tobacco products inserted into a vending machine from which assembled cigarettes are dispensed. The tax is increased from 3.06 cents on each cigarette dispensed from the vending machine to 4.52 cents. By increasing the cigarette tax in the bill, the inventory tax is also assessed on cigarettes remaining in inventories taxed under the previous tax rate that is equal to the difference between the previous tax rate and the new tax rate. Code section 453A.35 specifies that revenues from the tax on cigarettes are deposited into the health care trust fund created in Code section 453A.35A. DIVISION II —— TAX ON TOBACCO PRODUCTS. Currently, a tax is imposed on the distributor of all tobacco products (excluding cigarettes, little cigars, and snuff) at a rate of 22 percent of the wholesale sales price under Code section 453A.43(1)(a) and at a rate of 28 percent under Code section 453A.43(1)(b) for a combined rate of 50 percent tax on the wholesale sales price. The bill combines the 22 percent rate and the 28 percent rate and raises the tax on tobacco products from the combined rate of 50 percent to 55 percent of the wholesale sales price. Currently, the tax on cigars is capped at 50 cents per cigar. The bill raises the cap on the tax on cigars to 55 cents to match the percentage increase of the other tax increases within Code section 453A.43(1). The bill changes the tax on snuff to match the tax on other tobacco products within Code section 453A.43(1) by taxing snuff at 55 percent of the wholesale price rather than taxing snuff at a rate of $1.19 per ounce. By increasing the tax on the wholesale sales price of tobacco products in the bill, the inventory tax is assessed on any tobacco products remaining in inventories taxed under the previous tax rate that is equal to the difference between the S.F. _____ previous tax rate and the new tax rate. Code section 453A.35 specifies that revenues from the tax on tobacco products are deposited into the health care trust fund created in Code section 453A.35A. The bill also makes other conforming changes to Code section 453A.43. DIVISION III —— EXCISE TAX ON VAPOR PRODUCTS. The bill creates an excise tax on vapor products at a rate of 15 percent on the sales price from the retail sale, including a delivery sale, of vapor products to consumers. The excise tax is in addition to any other tax imposed by law. The excise tax shall be collected at the point of sale from the consumer. The bill requires the director of revenue to administer the vapor product excise tax as nearly as possible in conjunction with the administration of the state sales and use tax law, except that portion of the law that implements the streamlined sales and use tax agreement. The bill deposits all revenues raised from the vapor products excise tax into the health care trust fund created in Code section 453A.35A. The bill requires the department to adopt rules to administer the new excise tax. The bill makes other conforming changes to implement the new tax. DIVISION IV —— EXCISE TAX ON CONSUMABLE HEMP PRODUCTS. The bill creates an excise tax on consumable hemp products at a rate of 15 percent on the sales price from the retail sale, including a delivery sale, of consumable hemp products to consumers. The excise tax is in addition to any other tax imposed by law. The bill requires the department to adopt rules to administer the new excise tax. The bill requires the director of revenue to administer the consumable hemp excise tax as nearly as possible in conjunction with the administration of the state sales and use tax law, except that portion of the law that implements the streamlined sales and use tax agreement. The bill deposits all revenues raised from the consumable hemp excise tax into the health care trust fund S.F. _____ created in Code section 453A.35A. DIVISION V —— APPROPRIATIONS. For the fiscal year beginning July 1, 2026, and ending June 30, 2027, the bill makes an appropriation to the department of human services in the amount of $1 million from the health care trust fund created in Code section 453A.35A, to be used to provide a grant to the Iowa healthiest state initiative to support the double up food bucks program to make fresh fruits and vegetables sold at farmers markets, grocery stores, and other participating locations accessible to individuals and families who reside in this state and receive assistance through the federal supplemental nutrition assistance program. For the fiscal year beginning July 1, 2026, and ending June 30, 2027, the bill makes an appropriation to the department of justice in the amount of $1 million from the health care trust fund created in Code section 453A.35A, to be used to provide victim assistance grants to care providers providing services to victims of human trafficking.

Committee Categories

No sponsors listed

Other Sponsors (1)

Failed committee passage, in Health and Human Services. (on 02/19/2026)

Official Document