Kentucky lawmakers have passed House Bill 757 (HB 757), a broad revenue package that includes a reduction in the state tax rate on premium cigars. The bill has now been transmitted to Governor Andy Beshear for consideration.

What the Bill Does

HB 757 would lower the tax on premium cigars from 15 percent of the wholesale price to 6 percent, effective July 1, 2026. If enacted, this change would represent a significant reduction in the overall tax burden and would position Kentucky among the lower-tax states for premium cigars.

As originally introduced, the legislation included a 60-cent tax cap on premium cigars. However, given Kentucky’s existing tax structure, the cap was expected to have a more limited impact on most products. During the legislative process, lawmakers revised the proposal and ultimately adopted a reduced tax rate as an alternative approach.

In addition to the tax change, HB 757 establishes a statutory definition of a “premium cigar.” The definition includes criteria related to:

Handmade construction
A whole leaf tobacco wrapper
A 100 percent leaf tobacco binder
Hand-capped production
A specified minimum weight threshold

The inclusion of a definition provides greater clarity in state law regarding the classification of premium cigars.

Next Steps

Governor Beshear has 10 days (excluding Sundays) to sign, veto, or allow the bill to become law without his signature. The current deadline for action is April 16, 2026.

CRA will continue to monitor the bill and provide updates as additional information becomes available.

The post Kentucky Legislature Passes Bill to Reduce Premium Cigar Tax Rate appeared first on Cigar Rights.