MO · 10-Q · 2026Q2 · Full report

Tobacco Excise Tax Pressure

ALTRIA GROUP, INC. · 2026-07-30 · Importance 32 · Surprise 24

U.S. federal, state and local tobacco excise taxes continue to rise, with the weighted-average state cigarette tax increasing from $0.36 per pack at the end of 1998 to $2.02 per pack as of July 27, 2026. Utah enacted a cigarette excise-tax increase in 2026, while additional increases remained under consideration. As of July 27, 2026, 37 states, the District of Columbia, Puerto Rico and various localities taxed e-vapor products, and 21 states plus the District of Columbia taxed oral nicotine pouches. Management expects tax increases to reduce consumption, shift purchases toward discount or lower-taxed products and increase counterfeit and contraband risk, potentially materially affecting sales, cash flows and innovative nicotine-product adoption.

Key facts

• As of July 27, 2026, one state (Utah) has enacted legislation increasing cigarette excise taxes in 2026. source
• Excise taxes on products decreased $127 million (8.2%) for the six months ended June 30, 2026 versus the six months ended June 30, 2025 due primarily to higher refunds of taxes and duties paid on imported cigarettes and lower shipment volume in the smokeable products segment. source
• Excise taxes on products for the six months ended June 30, 2026 were $1,425 million and for the six months ended June 30, 2025 were $1,552 million. source
• Between the end of 1998 and July 27, 2026, the weighted-average state cigarette excise tax increased from $0.36 to $2.02 per pack. source
• As of July 27, 2026, the federal government, 24 states, Puerto Rico, Philadelphia, Pennsylvania and Cook County, Illinois have adopted a weight-based tax methodology for MST. source
• As of July 27, 2026, 37 states, the District of Columbia, Puerto Rico and a number of cities and counties have enacted legislation to tax e-vapor products. source
• As of July 27, 2026, 21 states and the District of Columbia have enacted legislation to tax oral nicotine pouches. source
• Excise taxes for the oral tobacco products segment were $(45) million for the six months ended June 30, 2026 and $(50) million for the six months ended June 30, 2025. source