Title: Maryland Tax Alert
Cigarettes, Other Tobacco Products, and Electronic Smoking Devices - July 1, 2024, Tax Rate Changes
I. Tax Rate Changes
On May 16, 2024, Governor Wes Moore signed into law, Senate Bill 362, the Budget Reconciliation and Financing Act of 2024. Among its many provisions, the law increases excise tax rates on cigarettes and on the wholesale price of other tobacco products (“OTP”) and increases the sales and use tax rate on the sale of electronic smoking devices (“ESDs”), including vaping liquid sold in a container that contains more than 5 milliliters of vaping liquid. The bill is effective July 1, 2024.
New rates for tobacco products are as follows:
| Rate through June 30, 2024 | New Rate, Effective July 1, 2024 | |
|---|---|---|
| Cigarettes (pack of 20) | $3.75 per package | $5.00 per package |
| Cigarettes (pack of more than 20) | $0.175 per cigarette in the package | $0.25 per cigarette in the package |
| Other Tobacco Products (“OTP”) (excluding pipe tobacco and cigars) | 53% of the wholesale price of the tobacco products | 60% of the wholesale price of the tobacco products |
| Rate through June 30, 2024 | New Rate, Effective July 1, 2024 | |
|---|---|---|
| Electronic Smoking Device (“ESD”), including vaping liquid in a container of more than 5 ml | 12% sales and use tax | 20% sales and use tax |
The following rates are unchanged:
| Rate through June 30, 2024 | New Rate, Effective July 1, 2024 | |
|---|---|---|
| Cigars (nonpremium) | 70% of wholesale price | 70% of wholesale price (no change) |
| Premium Cigars | 15% of wholesale price | 15% of wholesale price (no change) |
| Pipe Tobacco | 30% of wholesale price | 30% of wholesale price (no change) |
| Rate through June 30, 2024 | New Rate, Effective July 1, 2024 | |
|---|---|---|
| Vaping liquid in a container of 5 ml or less | 60% sales and use tax | 60% sales and use tax (no change |
II. ADDITIONAL INFORMATION ABOUT THE FLOOR TAX
A. General
- The new tax rates apply to all cigarette and OTP (excluding cigars and pipe tobacco) floor stock and to loose tax stamps in Maryland as of 12:01 a.m. on July 1, 2024. Inventory should be counted as of the close of business June 30, 2024. If your business is open 24 hours, inventory should be counted at 12:01 am on July 1, 2024.
- The floor tax return and payment are due September 30, 2024.
- Read the forms carefully and complete them, or collect the necessary data for completion, before moving or selling any OTP or applying any tax stamps on July 1, 2024.
B. For Retailers
- Retailers pay the floor tax on stamped inventory. The floor tax return is required to pay the difference between the rate your wholesaler paid and the new tax rate effective July 1, 2024, on your existing inventory of OTP and cigarettes.
- To report and remit the additional tax due on cigarettes and OTP inventory, complete the 2024 Cigarette and Other Tobacco Products Floor Tax Return.
-If you have more than one retail store, you must file a floor tax return for each store. You may submit one payment (check or direct debit) for the total floor tax owed for all stores.
C. For Wholesalers
Wholesalers pay the floor tax on loose tax stamps.
To report the additional tax due on loose tax stamps, complete the 2024 Cigarette and Other Tobacco Products Floor Tax Return.
Wholesalers may apply the discount of 0.82% of the price of cigarette stamps when calculating the floor tax due.
III. IMPORTANT DATES
July 1, 2024 – Effective date for new rates
September 30, 2024 – Final remittance date of the floor tax return and additional tax
The floor tax return and other information related to cigarettes and OTP are available on the Comptroller of Maryland’s website at www.marylandtaxes.gov. Questions related to the cigarette and OTP floor tax can be directed to Taxpayer Services.