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
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