Bill > HF2406

Introduced Session

This bill relates to administration of and taxation on tobacco-related products including imposing a tax on alternative nicotine products and vapor products. DIVISION I —— TAXATION ON TOBACCO-RELATED PRODUCTS. TOBACCO PRODUCTS DEFINITION. The bill modifies the definition of tobacco products to include any form of tobacco for chewing or smoking consumption in any manner. NICOTINE DEFINITION. The bill defines “nicotine” to mean any form of the chemical nicotine, including any salt or complex, from any source, and includes nicotinic alkaloids and nicotine analogs and any substance intended to mimic or replicate the pharmacological effect of nicotine. The bill specifies for purposes of the definition of nicotine, any communication by, or on behalf of, the manufacturer, distributor, or retailer of a tobacco product that indicates that the product contains a nicotine analog constitutes presumptive evidence that the product contains a nicotine analog. CIGARETTE TAXATION. The bill raises the cigarette tax from 6.8 cents per cigarette to 14.3 cents per cigarette. The overall tax on a pack of cigarettes (20 cigarettes) goes from $1.36 to $2.86. 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 6.43 cents. The bill creates an administrative process where the cigarette tax may be increased in proportion to any retail sales price increases from year to year. The bill requires the department of revenue (department) to conduct a statewide survey of retail cigarette prices to determine the amount of increase from year to year. The tax is not increased if the retail sales price of cigarettes does not increase from year to year. In conducting the statewide survey of retail cigarette prices, the bill prohibits the department from considering state or federal tax increases on cigarettes in the survey. If the cigarette tax is increased through the administrative process, the bill requires the department to publish the new rate in the Iowa administrative bulletin and publish the new rate on the internet site of the department by December 31 following the determination date to adjust the tax rate. The calculation and publication of the adjusted rate is exempt from Code chapter 17A (Iowa administrative procedures Act). 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. ALTERNATIVE NICOTINE PRODUCTS —— LIMITATIONS. The bill prohibits a package of alternative nicotine products from containing more than 20 separately consumable products within the package. TOBACCO PRODUCTS DEFINITION. The bill modifies the definition of tobacco products to include snuff and snuff flour and makes other changes to the definition. TOBACCO PRODUCT, ALTERNATIVE NICOTINE PRODUCT, AND VAPOR PRODUCT TAXATION. 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 imposes the combined 50 percent rate on the wholesale sales price on more products including alternative nicotine products, vapor products, cigars, and snuff. When the tax on the wholesale sales price of any product is imposed in the bill, the bill specifies the resulting amount shall not be below $2.86. Due to the imposition of the 50 percent tax on the wholesale sales price of cigars and snuff, the bill strikes the 50 cent taxation on cigars and the $1.19 per ounce tax imposed on snuff. The bill applies the same minimum $2.86 rate upon consumers for the use or storage of tobacco products, alternative nicotine products, and vapor products, if the tax imposed on wholesale sales price tax has not otherwise been paid at the wholesale level. By imposing new tax rates on alternative nicotine products, vapor products, cigars, and snuff, the inventory tax may be assessed on any nicotine products, vapor products, cigars, and snuff 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. DIVISION II —— CONFORMING CHANGES. The bill make numerous conforming changes by adding alternative nicotine products and vapor products to reflect the changes made by the bill.

AI Summary

Committee Categories

Brett Barker (R)*,  Michael Bergan (R)*,  Steve Bradley (R)*,  Shannon Latham (R)*,  Norlin Mommsen (R)*, 

Introduced, referred to Ways and Means. H.J. 258. (on 02/11/2026)

Official Document