Maine’s New Nicotine Tax Hike: A Game-Changer for Tobacco Products
Maine is set to implement a major tax increase on nicotine products starting January 5, 2026, as part of Governor Janet Mills’ $10.4 billion two-year budget for 2025–2026. This marks the state’s first adjustment to tobacco excise rates since 2005, positioning Maine among the highest-taxed states for tobacco products in the U.S.
Here’s a breakdown of the changes, their implications, and the debate surrounding this landmark legislation.
What’s Changing?
The new law significantly raises taxes across various nicotine products:
Cigarettes: The tax per pack will increase from $2 to $3.50, aligning Maine with some of the highest cigarette tax rates in the country.
Cigars: The tax will jump from 43% to 75% of the wholesale price, making Maine’s cigar tax second only to Utah’s 86% rate, according to Halfwheel.
Smokeless and Chewing Tobacco: These products will also face substantial tax increases.
Automatic Adjustment Clause: A unique provision ties taxes on other tobacco products to future cigarette tax increases, allowing proportional adjustments without new legislation.
The tax hikes will hit consumers hard. For example, a cigar with a suggested retail price of $9.50 will see its tax rise from $2.04 to $3.56, while a $16 cigar could carry a tax of around $6, up from $3.44.
Why the Change?
Governor Mills has positioned the tax hikes as a public health strategy to reduce tobacco use, particularly among young people, while also aligning Maine’s tax rates with those of neighboring states. Prior to this change, Maine had the lowest cigarette tax in New England. The increased revenue is intended to fund public health initiatives, addressing the significant health risks associated with tobacco use.
“We know tobacco use is a leading cause of preventable death,” Mills said earlier this year. “This change will help deter use, particularly among young people, while also supporting critical public health investments.”
Industry Concerns
Tobacco retailers and small business owners are less enthusiastic, warning that the steep tax increases could push consumers to buy products online or in neighboring states like New Hampshire, where cigar taxes are significantly lower.
“Maine risks losing revenue as consumers seek more affordable alternatives outside the state,” said a retail representative. This could hit small, independent shops particularly hard.
The automatic adjustment clause is another point of contention, as it could enable future tax hikes without legislative oversight, potentially exacerbating the economic burden on businesses and consumers.
A National Perspective
Maine’s tax hike places it among the top states for tobacco taxation. The cigarette tax increase ties it with high-tax states like New York and Alaska, while the cigar tax rate trails only Utah’s. This move reflects a broader trend of states using tax policy to curb tobacco use, but it also underscores the tension between public health goals and the economic impact on retailers and consumers.
What’s Next?
As the January 5, 2026, implementation date nears, Maine’s nicotine product market is preparing for significant changes. Consumers may face higher prices, retailers could see shifts in purchasing behavior, and policymakers will be monitoring the law’s effects on public health and state revenue. The automatic adjustment clause ensures that future tax hikes remain a possibility, keeping this issue in the spotlight.
Stay tuned for updates as Maine navigates this bold shift in tobacco regulation.
This blog reflects information available as of July 17, 2025.
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