(The Center Square) – Legislation that would have again raised taxes on nicotine products did not advance in the 2026 session, but smokers and other tobacco users are already paying some of the highest prices in the nation, with growing evidence that the high tax rate is fueling the illegal trade.
Senate Bill 6129 sought to impose a new 90% excise tax on most non-cigarette nicotine products and a 100% excise tax on flavored nicotine products.
It would have also raised the cigarette tax by nearly $2 more per pack.
Cigarettes in Washington state cost an average of approximately $12.29 per pack, with state taxes of over $3.00 per pack. Washington ranks among the top ten most expensive states for cigarettes.
North American Affairs Manager for the Consumer Choice Center David Clement told The Center Square that once a tax becomes too punitive, it stops encouraging people to quit and starts producing unintended consequences.
“Wanting to encourage people to quit smoking is a totally legitimate public policy initiative, but part of that has to be treating products when it comes to taxation based on a continuum of risk,” Clement said. “So we shouldn’t be ratcheting up taxation on reduced risk products that significantly lower public health costs related to smoking.”
He noted that many consumers in Washington simply avoid the tax hikes by purchasing products in neighboring states such as Idaho, where prices are significantly lower.
Idaho has one of the lowest cigarette taxes in the nation at just $0.57 per pack. Retail prices there can be nearly $4.00 cheaper than in Washington.
Clement said the other issue for Washington is the illegal market coming across the border from Canada.
“So, in terms of north-south trade, that would be primarily through indigenous reserves, some of which straddle the border,” Clement said. “It’s an unchecked border point between Canada and the United States and a huge gray area in terms of border enforcement between Canada and the US on that front.”
The Mackinac Center recently published a study that measured the degree to which cigarettes are trafficked among the 48 contiguous states, as well as to Canada and from Mexico.
They found that 35% of total cigarette consumption in the Evergreen State was a function of tax evasion or avoidance – what they called smuggling. This ranked Washington fifth-highest in the nation, behind California, New York, Massachusetts and New Mexico.
“As any illegal venture does, if you can find an avenue to make money, you exploit it. So that is the other potential issue beyond the state not getting tax revenue or the safety of the products that people are buying illegally,” Clement said. “The other implication here is the harder you make it to buy legal products, the bigger the incentive it is for bad actors to enter the illegal space, and in some cases, it is the absolute worst of the worst of those bad actors.”
Washington tobacco users can also purchase legally on reservation lands including Squaxin Island, where the tribe manufactures its own brand. The tobacco products can be sold tax-free to non-Indians because they are produced on-site, at about half the price of a pack of cigarettes elsewhere.
The tobacco tax alone is expected to bring in more than $32 million dollars in 2026.
