New York Doubles Down on Sin Taxes Instead of Smoking Solutions

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Key Points:

• Legislative Overview: Governor Kathy Hochul’s FY 2027 Budget Proposal would apply New York’s 75 percent wholesale Other Tobacco Product (OTP) tax to nicotine pouches, dramatically increasing taxes on reduced-risk alternatives.

• Core Shift: The proposal reclassifies nicotine pouches under the state’s OTP tax structure – taxing them at the same 75 percent wholesale rate as traditional tobacco products.

• Revenue Allocation: At least $50 million annually in OTP revenue would be directed to the Health Care Reform Act (HCRA) fund.

• Already a High-Tax State: New York already imposes one of the highest cigarette taxes in the nation at $5.35 per pack, heavily burdening adult smokers.

• Adult Smoking Trends: In 2024, more than 1.5 million New York adults (9.9 percent) were current smokers – a 6.5 percent increase from 2023, representing 108,271 additional adults smoking.

• Income Disparities: Among adults earning $25,000 or less, 16.7 percent were current smokers, compared to 6 percent of those earning $50,000 or more – making low-income adults 2.8 times more likely to smoke.

• Education Disparities: 16.5 percent of adults without a high school diploma smoked, compared to 4.5 percent of college graduates – meaning less-educated adults were 3.7 times more likely to smoke.

• Adult Vaping Population: In 2024, approximately 1 million New York adults (6.3 percent) were current e-cigarette users – an increase of 40,271 adults from 2023.

• Policy Contradiction: The Executive Budget itself acknowledges declining taxable consumption and notes that consumers are increasingly turning to illegal flavored products or substitutes – highlighting unintended consequences of existing prohibitions.

• Regional Comparison: Since New York’s 2020 flavored vape ban, adult smoking declined just 17.5 percent, compared to 34.5 percent in New Hampshire and 25.9 percent in Pennsylvania.

• Young Adult Impact: Between 2020 and 2024, smoking among New Yorkers aged 18–24 declined only 16.4 percent. By contrast, young adult smoking fell 67.7 percent in New Hampshire and 67.2 percent in Connecticut.

• Scientific Evidence Ignored: Federal regulators have repeatedly determined that certain nicotine pouches are “appropriate for the protection of public health,” finding substantially lower levels of harmful constituents compared to cigarettes and evidence of adult switching.

• Harm Reduction Undermined: Taxing nicotine pouches at the same rate as combustible tobacco ignores the continuum of risk and penalizes products that can help adults move away from smoking.

• Revenue vs. Prevention: In 2024, New York collected $1.9 billion in tobacco excise tax revenue but allocated only $46.7 million (2.5 percent) to tobacco control – about $0.025 for every $1 collected.

• Equity Concerns: Because smoking remains disproportionately concentrated among lower-income and less-educated adults, expanding sin taxes further entrenches regressive fiscal policy.

• Bottom Line: New York’s proposal doubles down on punitive taxation rather than evidence-based smoking solutions. By taxing reduced-risk products like nicotine pouches at combustible levels, the state risks undermining harm reduction, worsening inequities, and slowing progress in reducing smoking-related disease.

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New York Governor Kathy Hochul is seeking to impose a massive tax on nicotine products. Included in her FY 2027 Budget Proposal is language to apply the Empire State’s Other Tobacco Product (OTP) tax to nicotine pouches. Applying sin taxes to reduced-risk alternatives to cigarettes is yet another example of the harm the Empire State risks inflicting on millions of adults who are unable or unwilling to quit smoking.

Governor Hochul proposes applying the state’s 75 percent wholesale OTP tax to nicotine pouches – the same rate currently imposed on traditional tobacco products. At least $50 million in OTP revenues is to be budgeted annually into the Health Care Reform Act (HCRA) fund.

Due to the state’s prohibition on flavored e-cigarettes, this proposal is especially harmful to the millions of adults who currently smoke in the Empire State, as well as those who use alternatives to cigarettes – from e-cigarettes to nicotine pouches.

According to the Centers for Disease Control and Prevention’s Behavioral Risk Factor Surveillance System (BRFSS), more than 1.5 million New Yorkers aged 18 or older were current smokers in 2024 – representing 9.9 percent of the adult population. This marked a 6.5 percent increase from 2023, when 9.3 percent of adults smoked, and represents an additional 108,271 adults smoking.

These adults are already burdened by one of the highest cigarette excise taxes in the nation – $5.35 per pack of 20 cigarettes. As national data consistently show, combustible cigarette taxes disproportionately impact low-income and less-educated adults, who smoke at significantly higher rates than their wealthier and more educated counterparts.

According to the 2024 BRFSS, among New York adults earning $25,000 or less annually, 16.7 percent were current smokers, compared to only 6 percent of adults earning $50,000 or more. Low-income adults were 2.8 times more likely to smoke. Similarly, among adults who did not graduate high school or obtain a GED, 16.5 percent were current smokers in 2024, compared to 4.5 percent of college graduates. New Yorkers without a high school diploma were 3.7 times more likely to smoke than those with a college degree.

While BRFSS does not yet track nicotine pouch use, e-cigarette use has continued to grow in New York, with many adults reporting using these products to quit smoking or reduce cigarette consumption.

In 2024, an estimated 1 million New Yorkers aged 18 or older were current e-cigarette users – representing 6.3 percent of adults. This reflects a 3.3 percent increase from 2023, when 6.1 percent were vaping, and represents an additional 40,271 adults using e-cigarettes. Unlike cigarette smoking, vaping rates do not show the same stark disparities across income and education levels.

Yet many of these 1 million adults are increasingly exposed to illicit products due to the state’s flavored vape prohibition. Notably, Hochul’s FY 2027 Executive Budget presentation acknowledges the “continuing trend of declining taxable consumption” of cigarettes and other tobacco products, including an expected marginal decline in vaping tax receipts “likely due in part to consumers seeking illegal flavored vapor products and/or substitutes such as alternative nicotine products.”

The failure of New York’s 2020 flavored vape ban becomes evident when comparing regional smoking trends. Between 2020 (when the ban went into effect) and 2024, smoking rates among all New York adults declined by only 17.5 percent. By comparison, rates declined by 34.5 percent among New Hampshire adults and by 25.9 percent among Pennsylvania adults.

The effects are even more pronounced among young adults aged 18 to 24. Between 2020 and 2024, smoking rates among New York young adults declined by only 16.4 percent. The only states with worse declines were Massachusetts (5.9 percent decline) and New Jersey (11.4 percent decline) – both of which also prohibit flavored vapes. In contrast, smoking among young adults declined by 67.7 percent in New Hampshire and by 67.2 percent in Connecticut during the same period.

The governor’s tax proposal also ignores mounting scientific evidence on the efficacy of reduced-risk alternatives. For decades, researchers have understood that it is the smoke from combustion – not nicotine itself – that causes the overwhelming majority of tobacco-related disease. Over the past two decades, innovation has transformed the marketplace from combusted products to reduced-risk alternatives, including e-cigarettes, oral nicotine pouches, and heated tobacco products.

The U.S. Food and Drug Administration has determined that certain nicotine pouches are “appropriate for the protection of public health.” In January 2025, the FDA authorized the sale of more than two dozen nicotine pouch products in flavors ranging from citrus to spearmint. In its marketing authorization orders, the agency found that these products contain substantially lower amounts of harmful constituents than cigarettes and most smokeless tobacco products, and therefore “pose lower risk of cancer and other serious health conditions.” The FDA further concluded that evidence demonstrated “a substantial proportion of adults … completely switched” from traditional tobacco products to authorized nicotine pouch products.

In December 2025, the FDA granted marketing orders for additional nicotine pouch products, again finding lower levels of harmful and potentially harmful constituents compared to other oral and smokeless tobacco products, and noting the absence of measurable levels of several carcinogenic constituents. The agency determined these products have “the potential to provide a benefit to adults who smoke cigarettes and/or use other smokeless tobacco products.”

It is deeply problematic that the governor seeks to impose additional taxes on products that can help adults quit smoking – particularly when New York spends only a fraction of its existing tobacco revenues on cessation and prevention.

In 2024, New York collected $1.9 billion in state tobacco excise tax revenue, yet allocated only $46.7 million to tobacco control programs, including cessation, education, and prevention efforts. This amounts to just 2.5 percent of tobacco revenues – or approximately $0.025 for every $1 collected.

Rather than doubling down on punitive taxation of reduced-risk products, New York lawmakers should prioritize policies that accelerate the decline in smoking. Taxing nicotine pouches at the same rate as combustible tobacco ignores scientific evidence, disproportionately harms low-income adults, and risks undermining public health progress. If the Empire State is serious about reducing smoking-related disease, it should encourage – not penalize – innovation that helps adults transition 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.