Utah Lawmakers Scale Back Cigarette Tax but Target Harm Reduction

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Key Points:

• Legislative Overview: Utah lawmakers amended House Bill 337 to scale back a proposed cigarette tax increase while significantly raising taxes on tobacco harm reduction products.

• Policy Shift: The amended bill reduces the originally proposed cigarette tax increase but sharply raises taxes on alternatives such as e-cigarettes and nicotine pouches.

• Revised Cigarette Tax: The original bill proposed a $0.185-per-cigarette tax ($3.70 per pack). The amended version sets the tax at $0.11 per cigarette ($2.20 per pack) – only a $0.50 increase from the current rate.

• Floor Tax Provision: Retailers would be required to pay a floor tax on cigarette inventory beginning July 1, 2026, covering the difference between the old tax rate and the new rate.

• Nicotine Pouch Tax Changes: The original proposal applied an 86 percent wholesale tax on alternative nicotine products. The amended version instead imposes a $1 tax per container plus $0.05 per pouch for containers with more than 20 pouches.

• Major Vape Tax Increase: The bill raises the wholesale tax on e-cigarettes and nicotine vaping devices from 56 percent to 71 percent of the manufacturer’s sales price.

• Regressive Tax Concerns: Tobacco and nicotine taxes disproportionately impact lower-income and lower-educated populations, who use these products at higher rates.

• Historic Smoking Declines: In 2024, 146,489 Utah adults were current smokers, the lowest level recorded and a 5 percent decline from 2023.

• Income Disparities: 13.6 percent of Utah adults earning $25,000 or less smoked, compared to 2.9 percent of adults earning $50,000 or more, meaning low-income adults were 4.7 times more likely to smoke.

• Education Disparities: 15.3 percent of adults without a high school diploma smoked, compared to 1.6 percent of college graduates, nearly a tenfold difference.

• Youth Smoking Trends: In 2023, only 1.1 percent of Utah high school students reported current cigarette use, well below the 5 percent benchmark often associated with a “smoke-free society.”

• Adult Vaping Growth: In 2024, an estimated 177,329 Utah adults (6.9 percent) were current e-cigarette users.

• More Adults Vaping than Smoking: There were approximately 30,840 more adults vaping than smoking in Utah in 2024.

• Long-Term Vape Growth: Between 2016 and 2024, adult vaping increased 35.3 percent, reflecting growing use of smokefree alternatives.

• Vaping Disparities: 9.3 percent of adults earning $25,000 or less reported vaping, compared to 5.9 percent of adults earning $50,000 or more.

• Education Gap: Adults without a high school diploma were four times more likely to vape than college graduates.

• Youth Vaping Declines: In 2023, 5.7 percent of Utah high school students reported current e-cigarette use, a 41.2 percent decline from the 2019 peak.

• Adult vs Youth Use: Adult vaping rates exceed youth rates in Utah, suggesting e-cigarettes are primarily used by adults rather than youth.

• State Spending on Prevention: In 2024, Utah collected $139 million in tobacco tax revenue but spent only $15.4 million (11 percent) on tobacco control programs.

• Funding Gap: For every $1 collected in tobacco taxes, Utah spent roughly $0.11 on prevention and cessation programs.

• Bottom Line: The amended HB 337 shifts the tax burden away from combustible cigarettes and toward reduced-risk alternatives. By sharply increasing taxes on e-cigarettes and nicotine pouches while moderating the cigarette tax increase, the legislation risks discouraging adult smokers from switching to lower-risk products that federal regulators have determined are appropriate for the protection of public health.

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Legislation in the Beehive State has been amended in a way that appears to shield combustible cigarettes from the steep tax increases originally proposed while significantly raising taxes on tobacco harm reduction products. On March 5, the Utah Senate passed an amended version of House Bill 337 that reduces the proposed cigarette tax increase but substantially raises tax rates on alternatives such as e-cigarettes and nicotine pouches.

Under the original version, House Bill 337 sought to replace the existing tiered cigarette tax structure with a standardized flat rate of $0.185 per cigarette. For a pack of 20 cigarettes, this would have increased the tax from $1.70 per pack to $3.70 per pack. Under the amended version of HB 337, the cigarette tax is instead set at $0.11 per cigarette, or $2.20 per pack – representing only a $0.50 increase from the current rate. The amended version also includes a floor tax on cigarette inventory, requiring retailers to pay the difference between the old tax and the new rate on cigarettes in inventory beginning July 1, 2026.

The original version of HB 337 also eliminated the current $1.83-per-ounce tax on moist snuff and replaced it with an 86 percent wholesale tax. The same tax structure was applied to alternative nicotine products, defined as products containing nicotine intended for human consumption that are not cigarettes, tobacco products, or electronic cigarette products. This category includes nicotine pouches, dissolvable products, and other non-combusted, non-vaporized nicotine items. Currently, these products are taxed at $1.83 per ounce. Under the amended version, however, nicotine pouches would instead be taxed at $1 per container, plus $0.05 per pouch for containers containing more than 20 pouches.

Most significantly, HB 337 was amended to sharply increase the tax on e-cigarettes. The legislation raises the wholesale tax rate on e-cigarette substances, prefilled e-cigarettes, and nontherapeutic nicotine devices from 56 percent of the manufacturer’s sales price to 71 percent.

As previously noted in a THR101 Analysis & Commentary, cigarette and nicotine taxes are deeply regressive because lower-income and lower-educated individuals use these products at higher rates. This dynamic is especially pronounced in Utah, despite the state making significant progress in reducing smoking. Moreover, additional tobacco and nicotine taxes are unnecessary as combustible cigarette use is already at historic lows among both Utah adults and youth, while youth e-cigarette use has declined significantly since peaking in 2019.

According to the Behavioral Risk Factor Surveillance System survey conducted annually by the Centers for Disease Control and Prevention, in 2024 approximately 146,489 Utah adults were current smokers – the lowest rate ever recorded and a 5 percent decline from 2023, representing 3,779 fewer adults smoking.

Yet smoking remains heavily concentrated among lower-income populations. In 2024, 13.6 percent of Utah adults earning $25,000 or less per year were current smokers, compared to only 2.9 percent of adults earning $50,000 or more – making low-income adults 4.7 times more likely to smoke. Education disparities are similarly pronounced. In 2024, 15.3 percent of Utah adults without a high school diploma were smokers, compared to just 1.6 percent of college graduates – nearly a tenfold difference.

Among Utah youth, traditional tobacco use is nearly nonexistent. In 2023, only 9.5 percent of high school students reported ever trying combustible cigarettes, while just 1.1 percent reported current smoking – well below the World Health Organization’s five percent benchmark for a smoke-free society.

As smoking has declined, however, more adults have turned to smokefree alternatives such as e-cigarettes and oral nicotine products to quit smoking and remain smoke-free.

In 2024, an estimated 177,329 Utah adults were current e-cigarette users – representing 6.9 percent of the adult population. This is actually 19 percent higher than the percentage of adults who smoke combustible cigarettes. In fact, there were approximately 30,840 more adults vaping in Utah than smoking in 2024. These figures represent some of the highest vaping rates recorded and a 35.3 percent increase from 2016, when 5.1 percent of Utah adults reported vaping.

Similar to smoking patterns, vaping is more prevalent among lower-income and lower-educated populations, making these individuals especially vulnerable to excise taxes. In 2024, 9.3 percent of adults earning $25,000 or less reported vaping, compared to 5.9 percent of adults earning $50,000 or more. Adults without a high school diploma were four times more likely to vape, with 10.5 percent reporting use compared to only 2.6 percent of college graduates.

The legislation is also unnecessary to address youth vaping. Utah already has some of the lowest youth vaping rates in the country. In 2023, only 5.7 percent of Utah high school students reported current e-cigarette use – a 41.2 percent decline from the 2019 peak of 9.5 percent. Notably, youth vaping was also lower than adult vaping rates, as 6.7 percent of Utah adults reported current e-cigarette use in 2023. In other words, more adults than youth were using e-cigarettes in the Beehive State, reinforcing that these products are primarily used by adults rather than driving widespread youth use.

Perhaps most concerning is that Utah currently spends very little of its existing tobacco tax revenue on programs designed to help adults quit smoking or prevent youth initiation. In 2024, Utah collected approximately $139 million in tobacco tax revenue but allocated only $15.4 million toward tobacco control programs – just 11 percent of total collections. For every $1 Utah collected in tobacco taxes, only about $0.11 was spent on prevention and cessation efforts.

The amended version of HB 337 ultimately shifts the tax burden toward reduced-risk nicotine products rather than combustible cigarettes. By significantly increasing taxes on e-cigarettes while introducing new taxes on nicotine pouches, the legislation risks discouraging adult smokers from switching to alternatives that federal regulators have determined are “appropriate for the protection of public health.”

Rather than relying on increasingly punitive and regressive excise taxes – particularly on products that may help adults quit smoking – Utah policymakers should prioritize better allocating existing tobacco revenues to evidence-based cessation and prevention programs. With smoking and youth tobacco use already at historic lows in the Beehive State, policymakers should ensure that public health policy continues to support harm reduction and sustained declines in smoking rather than inadvertently protecting the most harmful product on the market.

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.