Nebraska passed a bill to impose a 20% wholesale excise tax on nicotine replacement products (such as nicotine packs), which is expected to bring in $3.4 million by June 30, 2027, and will take effect on January 1, 2026, if passed.
Key points:
1. The state of Nebraska advanced legislation for a 20% wholesale excise tax on nicotine and similar products, which, if passed, would take effect on January 1, 2026.
2. The bill is expected to bring in $3.4 million in taxes in the first two years.
3. Tax reform on nicotine products is aimed at filling the budget deficit and funding education spending.
Proposed legislation in Nebraska, USA
According to the Nebraskaexaminer report on March 19. Nebraska lawmakers further pushed forward the crackdown on nicotine and “nicotine-like” products, passing a bill that proposes a 20% wholesale excise tax on replacement products.
Bill 9, introduced by state Sen. Jana Hughes and passed 41-0, would define “alternative nicotine products” and “nicotine analogs” in state law. Hughes aims to set standards for all future products, rather than re-legislating every time a new product comes along.
20% wholesale tax on nicotine replacement products
The legislation would cover nicotine pack brands such as Zyn, a way Hughes said could help curb the use of these drugs by young people while also generating revenue for state coffers.
Currently, these new products are taxed at the same statewide sales rate of 5.5 cents as other taxable products, as well as local sales taxes. If passed, the bill would take effect Jan. 1, 2026, and is expected to bring in $3.4 million in its first two fiscal years ending June 30, 2027.
Expected to generate $3.4 million in tax revenue in the initial two years
Over the past two years. Hughes has introduced several bills aimed at increasing taxes and regulations on nicotine products, known as e-cigarettes. This year, she also introduced another bill. Bill 712, which plans to impose a 40 percent wholesale tax on e-cigarettes as of Oct. 1, instead of the lower two-tier rate. The proposal is expected to bring in $56.4 million by mid-2027.
In a special session last summer, former state Senator Lou Ann Linehan proposed a 10-cents-per-ounce tax on nicotine replacement products, but it failed. Hughes said that he intended to consider such taxes in the interim. She reiterated the proposal to move to a wholesale tax as a more “fair and equitable” approach because taxing by weight could incentivize companies to increase nicotine concentrations and cause more harm to children.
State Sen. Jane Raybould proposed changing the tax to a weight basis, echoing the concerns of certain tobacco lobbyists that a 20 percent wholesale tax could create a 700 percent tax increase on some products that would be “regressive.” But her amendment failed, with only 24-5 votes in favor.
Senator Brad von Gillern called the criticism of the committee’s staff a “red herring.” Hughes asked Raybould directly during the conversation whether his amendment was influenced by the multinational tobacco company Philip Morris International, which local lobbying firms in the Nebraska Legislature represent. Raybould declined to answer and also declined to identify the lobbyist to reporters. The amendment failed 24-5.
Bill 9, one of two General Committee priority bills this year, will be debated in two rounds.
