Missouri’s Tobacco Tax Plan Undermines Harm Reduction

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Key Points:

• Proposal Overview: Missouri lawmakers introduced HB 2535 to fund property tax relief for disabled veterans, Purple Heart recipients, and Gold Star spouses by raising cigarette taxes and creating new excise taxes on nicotine, vapor, OTP, paraphernalia, and hemp-derived products.

• Tax Increases Detailed: The bill would raise the cigarette tax from $0.17 to $0.27 per pack, impose a new 10 percent excise tax on vapor products and non-tobacco nicotine products, increase the OTP tax from 10 percent to 12 percent, and apply a 10 percent tax on tobacco paraphernalia and hemp-derived consumables, with revenues directed to the Veterans Property Tax Relief Fund.

• Harm Reduction Undermined: Applying excise taxes to lower-risk alternatives like vapor products and nicotine pouches contradicts public health goals by discouraging switching away from combustible cigarettes, which cause the overwhelming share of tobacco-related disease.

• Regressive Impact: Cigarette and nicotine taxes are highly regressive, falling hardest on lower-income adults, who are far more likely to smoke and vape. In 2024, 33.3 percent of Missourians earning $25,000 or less smoked, compared to 9.6 percent of those earning $50,000 or more.

• Limited Effectiveness of Past Taxes: Missouri’s cigarette taxes have barely reduced smoking among low-income adults, with declines averaging 0.08 percent annually from 2004-2024, compared with 2.6 percent per year among higher-income adults.

• Vaping Concentrated Among Lower-Income Adults: In 2024, 30.4 percent of Missourians earning $25,000 or less reported vaping, versus 8.2 percent of higher-income adults – meaning new vape taxes would also be disproportionately burdensome.

• Veterans Disproportionately Affected: Veterans and active-duty military members smoke and vape at higher rates than civilians, so a tax plan funding veteran relief through tobacco and nicotine taxes would tax veterans more heavily than the general population.

• Evidence on Veteran Use: Research shows nearly one-quarter of veterans currently use tobacco, with higher cigarette use among older veterans and higher e-cigarette and poly-use among younger veterans, particularly those receiving care through the VHA.

• Missed Opportunity on Cessation: Missouri already devotes minimal tobacco revenues to cessation – only $2.9 million out of $219.6 million in 2024 (about 1.1 percent). Raising taxes without reinvesting meaningfully in quitting support is unlikely to reduce smoking.

• Bottom Line: While aiding veterans is commendable, HB 2535 relies on regressive taxes that penalize low-income adults and veterans while undermining harm reduction. Missouri should pursue alternative funding mechanisms and expand cessation and harm-reduction access rather than taxing safer alternatives that help adults move away from smoking.

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In an effort to provide property tax relief for military veterans, legislation has been introduced in the Show-Me State that would increase Missouri’s excise tax rate on combustible cigarettes, create new taxes on nicotine and vapor products, and raise the tax on other tobacco products (OTP). While providing relief to American veterans is a laudable goal, increasing tobacco taxes disproportionately harms lower-income adults, and imposing excise taxes on alternatives to combustible cigarettes undermines their harm-reduction potential. Further, it is well established that military members and veterans smoke and vape at rates higher than the general population – meaning this proposal would effectively tax veterans more heavily in order to reduce tax burdens elsewhere.

House Bill 2535 repeals and reenacts portions of Missouri’s tax code to establish a property tax exemption program for disabled veterans, Purple Heart recipients, and Gold Star spouses. The program would be funded through new and increased taxes on cigarettes and other tobacco products, including cigars and smokeless tobacco; alternative nicotine products such as nicotine pouches; vapor products; tobacco paraphernalia; and a newly created tax on hemp-derived products, including CBD and Delta-variant products. All revenues generated would be deposited into the Veterans Property Tax Relief Fund (VPTRF).

Under the proposal, Missouri’s tax on combustible cigarettes would increase from eight and one-half mills per cigarette ($0.17 per pack) to 13.5 mills per cigarette ($0.27 per pack). One hundred percent of the additional five-mill-per-cigarette tax would be directed to the VPTRF. HB 2535 would also impose a new 10 percent excise tax on vapor products and alternative nicotine products that do not contain tobacco, assessed at the manufacturer or distributor invoice price. All revenues from these new taxes would be deposited into the relief fund.

The legislation would further increase the OTP tax from 10 percent to 12 percent of the invoice price. The additional two percent would be deposited into the VPTRF, while the original 10 percent would continue to be allocated to the Health Initiatives Fund. In addition, HB 2535 would apply a new 10 percent excise tax to tobacco paraphernalia, including vape devices and hardware, hookahs, pipes, rolling machines, and other accessories used for combustion or vaporization. Hemp-derived consumable products would also be subject to a 10 percent excise tax.

While providing property tax relief to veterans is a worthy objective, cigarette taxes are among the most regressive taxes imposed by states and disproportionately burden lower-income and lower-educated adults. Moreover, excise taxes are intended to discourage the use of the most dangerous products. Applying these taxes to tobacco harm-reduction products – such as oral nicotine and vapor products, which are substantially less harmful than combustible cigarettes – runs counter to public health goals and undermines tools that have helped adults transition away from smoking.

According to data from the Centers for Disease Control and Prevention, 14.7 percent of Missouri adults were current smokers in 2024, representing more than 716,000 individuals. Low-income adults were 3.9 times more likely to smoke, with 33.3 percent of adults earning $25,000 or less reporting current smoking, compared to just 9.6 percent of adults earning $50,000 or more.

Missouri’s existing cigarette tax structure has also failed to significantly reduce smoking rates among lower-income populations. Between 2004 and 2024, smoking rates among adults earning $25,000 or less declined by an average of just 0.08 percent annually, while rates among adults earning $50,000 or more declined by 2.6 percent per year during the same period.

Similarly, low-income Missourians are more likely to use vapor products. In 2024, 30.4 percent of adults earning $25,000 or less reported current vaping, compared to 8.2 percent of adults earning $50,000 or more. Low-income adults were 1.6 times more likely to vape.

Despite its stated goal of helping veterans, this legislation would place a disproportionate tax burden on that very population. Veterans and active-duty military members are more likely than civilians to use combustible cigarettes and alternative nicotine products, meaning they would bear a greater share of the new taxes.

An October 2025 study published in Nicotine & Tobacco Research examined differences in tobacco use between veterans and civilians. The study found that nearly one-quarter of veterans reported current tobacco use, with 19 percent smoking combustible cigarettes. Patterns of use varied by age: younger veterans aged 18–34 had higher risks of cigar use, e-cigarette use, and poly-tobacco use, while older veterans were more likely to smoke cigarettes. The study also found that veterans receiving care through the Veterans Health Administration were more likely to use combustible cigarettes and other combustible products than veterans receiving care from non-VHA providers.

Compounding these concerns, Missouri devotes only a negligible share of existing tobacco revenues to helping adults quit smoking. In 2024, the state collected $219.6 million in tobacco-related revenues – a 3.7 percent increase from 2023, representing an additional $9.8 million. Yet Missouri allocated just $2.9 million to tobacco control programs, including cessation, education, and youth prevention – no increase from the prior year. This represents only 1.1 percent of tobacco revenues. Put another way, for every $1 Missouri received in tobacco monies in 2024, it spent just one cent on tobacco control.

Rather than imposing broad and punitive taxes on combustible cigarettes and harm-reduction products, Missouri lawmakers should explore alternative mechanisms to provide property tax relief for veterans without inadvertently taxing them more heavily. Lower-income adults and veterans are more likely to use these products and would be disproportionately harmed by additional excise taxes. Expanding access to effective smoking-cessation and harm-reduction programs could help reduce long-term healthcare costs associated with smoking – freeing up resources that could be directed toward meaningful property tax relief for Missouri’s veterans.

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.