On May 2, 2024, the Mississippi Governor signed SB 3105, which enacted a new excise tax on the sale of heated tobacco products in the state. While the tax on heated tobacco products is fairly limited in scope, it could signal Mississippi’s willingness to start taxing more novel products, such as e-cigarettes and vapor products, in the future. We discuss the details of SB 3105 below, including details for distributors and retailers who sell heated tobacco and similar products in Mississippi.
How Mississippi’s SB 3105 Defines Heated Tobacco Products
SB 3105 defines “heated tobacco products” as any tobacco product that produces an inhalable aerosol by either heating the tobacco without combustion or by heat generated from a combustion source that primarily heats rather than burns the tobacco. Mississippi’s definition for heated tobacco products is relatively narrow in that it does not fully target the broad universe of alternative smoking products. These are products that do not necessarily contain tobacco, such as vapor products and alternative nicotine products, but are still subject to excise tax in many states throughout the country.
What Is the New Excise Tax on Heated Tobacco Products in Mississippi?
The tax on heated tobacco products will be $1.25 on each disposable heated tobacco unit or stick sold for insertion into a heating device. Similar to other tobacco product taxes, the tax is due on or before the 15th of the month after the tax accrues. For example, the excise tax on the sales or transfers of heated tobacco products in January would be due by February 15th.
The wholesaler or dealer responsible for the first sale or transfer of heated tobacco products will be responsible for collecting and remitting the tax and must obtain a Tobacco Permit through the Mississippi Department of Revenue. Beyond the tobacco excise tax, the retail sale of heated tobacco products will also be subject to the applicable Mississippi sales tax.
Could Mississippi Start Taxing Other Vapor Products?
States across the country are slowly establishing a patchwork of excise taxes on vapor products at different rates and with distinctions on which products are actually subject to the tax. For example, some states only tax products containing nicotine, while others tax the product regardless of nicotine content. Mississippi is one state that has yet to institute a tax on vapor products, but passage of the tax on heated tobacco products could signal a step in that direction. In the 2024 legislative session, the state representative introduced HB 990, which sought to impose an excise tax on vapor products at a rate of 25 percent of the manufacturer’s list price. However, the bill died in committee on March 27, 2024 after being sent to the Committees on Public Health and Human Services and on Ways and Means.
Meet with a Tobacco Tax Professional Today
Mississippi’s tax on heated tobacco products should be relatively simple for dealers and retailers to administer starting July 1, 2024. The biggest issue will be for previously unlicensed sellers of these products to obtain the proper Tobacco Permit for their business, additionally questions could arise over whether a product fits the state’s definition of a heated tobacco product. If you or your clients have questions about the impact of HB 3105 on your tobacco tax compliance, please do not hesitate to schedule a consultation with our tobacco tax professionals. We help businesses throughout the United States with their tax concerns, including licensure, audits, appeals, and other interactions with regulating agencies.