Texas—Tobacco Tax: E-Cigarettes Subject to Sales Tax

Texas discusses the sales and use tax treatment of Electronic Cigarettes and Cigarettes. It clarifies that cigarette tax is only due on cigarettes made of tobacco or tobacco mixed with another ingredient and E-cigarettes do not fall within this definition because they do not contain tobacco. However, E-cigarettes are subject to sales and use tax.

E-cigarettes containing nicotine are not subject to the tobacco tax. Even though nicotine is a component of tobacco, it does not meet the definition of tobacco.

Cigarette distributors pay cigarette tax when they receive cigarettes for the purpose of making a first sale in Texas and customers pay sales tax when they buy cigarettes from the retailer. Position Letter 202007010L, Texas Comptroller of Public Accounts, July 24, 2020

About Davis Davis & Harmon LLC – Sales Tax Experts: Headquartered in Dallas, Texas, Davis Davis & Harmon LLC – Sales Tax Experts specializes in sales/use tax refund recovery and audit defense. Our team of consultants is comprised of former Big 4 sales tax consultants and state sales tax auditors. Each of our consultants has 15 to 20 years of experience, providing our clients with access to a highly specialized team of sales/use tax professionals. At Davis Davis & Harmon, LLC we are committed to maintaining the highest standards in our talent pool. We work hard to meet our clients’ needs by ensuring that you view our firm as an extension of your company and a member of your team.

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