Companion legislation, A.5284B in the Assembly and S.2133A in the Senate, has been introduced in New York and would establish a tax cap per premium cigar while also creating a remote seller tax collection framework.

If enacted, the bills would represent a significant change to New York’s current cigar tax structure and could provide meaningful relief to premium cigar consumers, retailers, and small businesses operating in the state.

What the Bills Would Do

As drafted, the legislation would cap the tax on premium cigars at 75 percent of the wholesale price or 50 cents per cigar, whichever is less. The bills would also formally define a “premium cigar” in state law and clarify that the tax is intended to be imposed only once on the sale of such products.

In addition, the legislation would establish a framework for remote sellers by requiring certain out-of-state sellers of premium cigars to collect and remit applicable taxes to New York. Under the bills, a seller would be required to comply if, during the current or previous calendar year, they either:

Completed 200 or more separate transactions into New York, or
Exceeded $100,000 in premium cigar sales to consumers in the state.

Why It Matters

New York currently imposes one of the most burdensome tax structures on premium cigars in the country, with cigars taxed at 75 percent of the wholesale price and no meaningful cap. That structure has created substantial pricing pressure on both consumers and brick-and-mortar retailers.

For consumers, the legislation would provide relief by preventing excessive taxation on premium cigars.

For retailers, the proposal could provide meaningful support at a time when New York’s tax and regulatory environment continues to place significant strain on specialty tobacco businesses. By capping the tax on premium cigars and requiring larger-volume remote sellers to collect and remit taxes, the legislation would help improve pricing competitiveness and address a longstanding imbalance between in-state retailers and out-of-state sellers.

A Step Toward Tax Fairness

More broadly, A.5284B and S.2133A reflect an effort to create a more balanced and rational tax structure for premium cigars in New York.

The legislation would help ensure that premium cigars are taxed in a manner that is more proportionate, while also supporting local businesses and improving compliance across the broader marketplace.

The bill has been introduced and is now awaiting referral to the Budget Committee.

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