Iowa Lawmakers Move Toward Risk-Proportionate Tobacco Taxation

---

Key Points:

• Legislative Overview: House File 1035 would recognize the continuum of risk by reducing the tax burden on heated tobacco products (HTPs) and distinguishing them from combustible cigarettes and Other Tobacco Products (OTPs).

• Core Shift: The bill redefines “cigarette” to include HTPs while establishing a separate, reduced tax rate – explicitly excluding HTPs from Iowa’s 22 percent wholesale OTP tax.

• Defined Product Category: HTPs are defined as tobacco-containing products that produce an inhalable aerosol by heating – rather than burning – the tobacco. The legislation clearly distinguishes HTPs from e-cigarettes.

• Reduced Tax Rate: HTP consumable units would be taxed at $0.034 per unit – half the current $0.068 per-cigarette rate – creating a risk-proportionate tax structure.

• Policy Direction: The proposal contrasts with other 2026 legislation seeking to raise cigarette taxes and impose steep taxes on reduced-risk alternatives, signaling a more evidence-based approach.

• Regional Context: Iowa’s 2024 adult smoking rate (12.9 percent) is comparable to the 12.3 percent regional average among neighboring states. Missouri (14.7 percent) and South Dakota (13.5 percent) reported higher rates.

• Young Adult Comparison: Iowa’s young adult smoking rate (5.7 percent) closely mirrors the 5.6 percent regional average, with several neighboring states reporting higher rates.

• Adult Smoking Trends: In 2024, 323,908 Iowa adults (12.9 percent) were current smokers – a 5.9 percent decline from 2023 and a 22.8 percent decline since 2016.

• Income Disparities: 23.8 percent of adults earning $25,000 or less smoked, compared to 8.4 percent of those earning $50,000 or more – making low-income adults 2.8 times more likely to smoke.

• Education Disparities: 21.5 percent of adults without a high school diploma smoked, compared to 5.9 percent of college graduates – lower-educated adults were 3.6 times more likely to smoke.

• Growing Demand for Alternatives: In 2024, 223,472 Iowa adults (8.9 percent) were vaping – a 15.6 percent increase from 2023 and a 107 percent increase since 2016.

• Vaping Disparities: 13.1 percent of adults earning $25,000 or less were vaping, compared to 5.9 percent of higher-income adults. Additionally, 15.3 percent of adults without a high school diploma vaped, compared to 3.5 percent of college graduates.

• Scientific Basis: Research consistently finds that combustion – not nicotine – is the primary driver of tobacco-related disease. HTPs significantly reduce exposure to harmful and potentially harmful constituents compared to cigarettes.

• Regulatory Recognition: The U.S. Food and Drug Administration has authorized certain heated tobacco products through the PMTA pathway and granted reduced-exposure claims under the MRTP framework, acknowledging lower levels of harmful chemicals compared to cigarettes.

• Global Evidence: Countries such as Japan have experienced substantial cigarette sales declines following the introduction of heated tobacco products.

• Equity Implications: Because smoking disproportionately affects lower-income and less-educated adults, creating lower-tax pathways for reduced-risk products provides a financial incentive to switch away from combustible cigarettes.

• Bottom Line: HF 1035 moves Iowa toward a risk-proportionate tobacco tax structure that reflects scientific evidence and the continuum of risk. By lowering the tax burden on heated tobacco products, lawmakers provide adult smokers with additional incentives to transition away from combustible cigarettes while maintaining appropriate regulatory oversight.

---

Legislation in the Hawkeye State seeks to recognize harm reduction by reducing the tax burden on heated tobacco products (HTPs). Such policies acknowledge the continuum of risk that exists among tobacco and nicotine products.

House File 1035 would redefine “cigarette” to include HTPs and establish a separate, reduced tax rate for such products, while explicitly excluding them from the definition of Other Tobacco Products (OTPs).

Under the proposed legislation, an HTP is defined as a “product containing tobacco that produces an inhalable aerosol by heating the tobacco by means of a device without combustion of the tobacco or by heat generated from a combustion source that only or primarily heats rather than burns the tobacco.” The legislation specifically distinguishes HTPs from e-cigarettes – another tobacco harm reduction tool.

In addition to including HTPs in the state definition of a cigarette, the legislation would impose a reduced tax rate on HTPs at $0.034 per consumable unit – half of the current tax of $0.068 per cigarette. HTPs are also explicitly excluded from the 22 percent wholesale OTP tax by being excepted from the definition of tobacco products in Iowa Code.

The legislation is a welcome step forward during a 2026 legislative session that has seen other proposals seeking to increase the state excise tax on combustible cigarettes and impose steep taxes on tobacco harm reduction products – from e-cigarettes to HTPs to oral nicotine pouches.

Contrary to discussion in previous committee hearings, Iowa does not have dramatically higher combustible cigarette use compared to neighboring states. According to the Centers for Disease Control and Prevention’s Behavioral Risk Factor Surveillance System (BRFSS), in 2024 the average adult smoking rate among surrounding states (Illinois, Minnesota, Missouri, Nebraska, and South Dakota) was 12.3 percent, compared to 12.9 percent in Iowa. Two neighboring states had higher rates: Missouri at 14.7 percent and South Dakota at 13.5 percent.

Smoking rates among young adults are also similar to neighboring states – 5.7 percent in Iowa compared to a 5.6 percent regional average. Minnesota, Missouri, Nebraska, and South Dakota all reported higher young adult smoking rates in 2024.

Yet there remain many Iowa adults who smoke and would benefit from access to lower-risk alternatives and a tax structure that incentivizes switching.

In 2024, an estimated 323,908 Iowa adults (12.9 percent) were current smokers. This represents a 5.9 percent decline from 2023 and 16,709 fewer adults smoking year-over-year. Since 2016, when 16.7 percent of adults smoked, Iowa’s smoking rate has declined by 22.8 percent.

Smoking is disproportionately concentrated among lower-income and lower-educated populations. In 2024, 23.8 percent of Iowa adults earning $25,000 or less were currently smoking, compared to 8.4 percent of those earning $50,000 or more – meaning low-income adults were 2.8 times more likely to smoke. Similarly, 21.5 percent of adults lacking a high school diploma were currently smoking, compared to 5.9 percent of college graduates. Lower-educated adults were 3.6 times more likely to smoke.

While there is no CDC data yet on HTP use, vaping rates have increased among Iowa adults – signaling a demand for alternatives to combustible cigarettes. In 2024, an estimated 223,472 adults (8.9 percent) were currently vaping – a 15.6 percent increase from 2023 and 32,030 additional adult e-cigarette users year-over-year. Since 2016, vaping prevalence has increased by 107 percent, rising from 4.3 percent to 8.9 percent.

Vaping, like smoking, is more prevalent among lower-income and lower-educated adults. In 2024, 13.1 percent of adults earning $25,000 or less were vaping, compared to 5.9 percent of those earning $50,000 or more. Additionally, 15.3 percent of adults without a high school diploma were vaping, compared to 3.5 percent of college graduates.

HTPs are another tobacco harm reduction tool, and by reducing the tax burden on their use, Iowa lawmakers are recognizing the continuum of risk among nicotine products.

For decades, it has been understood that “people smoke for the nicotine, but die from the tar.” Combustion drives the vast majority of smoking-related disease. By heating rather than burning tobacco, HTPs significantly reduce exposure to many harmful and potentially harmful constituents (HPHCs) found in cigarette smoke.

Peer-reviewed research supports this distinction. A 2019 review found that modern heated tobacco products reduced harmful constituents by at least 62 percent compared to cigarettes. A 2022 Cochrane Review concluded there is moderate-certainty evidence that HTP users are exposed to lower levels of toxicants and carcinogens than smokers. The UK Committee on Toxicity similarly estimates substantially lower toxicant exposure from HTP aerosols compared to combustible cigarette smoke.

Internationally, heated tobacco has contributed to significant shifts away from combustible cigarette use in countries such as Japan, where cigarette sales declined markedly following HTP introduction.

In the United States, the Food and Drug Administration has authorized certain heated tobacco products through the Premarket Tobacco Product Application (PMTA) pathway. In 2020, the FDA also granted a Modified Risk Tobacco Product (MRTP) order allowing reduced-exposure claims for one IQOS system, recognizing that it produces lower levels of certain harmful chemicals compared to cigarettes, though not authorizing reduced-risk claims.

Policymakers should recognize both the science and real-world experience demonstrating that non-combustible alternatives can reduce exposure to harmful constituents. By reducing the tax burden on heated tobacco products, Iowa lawmakers are signaling an understanding of relative risk and providing adult smokers with an additional incentive to move away from combustible cigarettes.

Nothing in this analysis is intended to influence the passage of legislation, and it does not necessarily represent the views of Tobacco Harm Reduction 101.