Earlier this week, the Illinois Legislature passed a budget bill containing a wide range of changes, including one that will benefit cigar consumers: a three-year cap on the tax that can be charged on cigars.
Beginning Jan. 1, 2027, the state will cap its cigar tax at 75 cents per cigar. Currently, the state has an uncapped tax rate of 45 percent of the wholesale price of cigars and several other tobacco products. This current structure means that a cigar with an MSRP of $3.34 would have 75 cents in tax added.
When the cap goes into effect, consumers will save money on any cigar with an MSRP over that $3.34 mark. In the case of a cigar with an MSRP of $9.50, the cap means that the pre-sales tax price will drop from $11.64 to $10.25 by halfwheel estimates based on common retail practices. However, retailers ultimately determine how the tax is incorporated into the price consumers pay.
The cap is not permanent, unfortunately; unless future legislation is passed to extend it, it will expire on Dec. 31, 2029. It also does not apply to little cigars, which are defined as having a filter and weighing less than four pounds per thousand.
The bill makes other changes to the state’s tobacco tax law, including expanding the tobacco products tax to remote sellers of cigars, pipe tobacco or alternative nicotine products, if that seller has annual gross receipts of more than $100,000 in the past year. Additionally, the way the tax is computed is changing slightly. Instead of using the wholesale price, it will be based on the actual price paid for each individual SKU before any stated discounts or rebates.
The budget bill still needs to be signed into law by Gov. JB Pritzekr, who holds line-item veto power.
Patrick Lagreid
I strive to capture the essence of a cigar and the people behind them in my work – every cigar you light up is the culmination of the work of countless people and often represents generations of struggle and stories. For me, it’s about so much more than the cigar – it’s about the story behind it, the experience of enjoying the work of artisans and the way that a good cigar can bring people together. In addition to my work with halfwheel, I’m the public address announcer for the Colorado Rockies and Arizona Diamondbacks during spring training, as well as for the Salt River Rafters of the Arizona Fall League, the WNBA’s Phoenix Mercury and the G-League’s Valley Suns. I was previously the PA announcer for the Arizona Rattlers of the Indoor Football League, and Goodyear Ballpark, spring training home of the Cincinnati Reds and Cleveland Guardians. I also work in a number of roles for Major League Baseball, plus I’m a voiceover artist. Prior to joining halfwheel, I covered the Phoenix and national cigar scene for Examiner.com, and was an editor for Cigar Snob magazine.
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