Louisiana’s Cigar Tax Cap Takes Effect

[JohnS]

In 2025, we brought you news that Louisiana will bring in a Cigar Tax Cap...

This Cigar Tax Cap will now come into effect.

Louisiana’s Cigar Tax Cap Takes Effect

January 1, 2026 - Charlie Minato

With very few exceptions, the prices of cigars move in one direction: up. But for consumers in Louisiana, the new year is likely to decrease the prices of many of the cigars they buy.

In June 2025, Gov. Jeff Landry signed into law H.B. 325, which establishes a tax cap of 50 cents, meaning that no cigar will pay more than 50 cents of state excise taxes. The bill didn’t change the tax rates for cigars, but any cigar that has an invoice price of more than $2.50, i.e. a cigar with an MSRP of $5 or more, will benefit from the change. The law doesn’t impact sales tax, though with lower sticker prices, the amount paid in sales tax should also decrease.

Starting today, the new cigar tax cap means:

• Cigars with an invoice price of 12 cents and less will be taxed at 8 percent
• Cigars with an invoice price between 13 cents and $2.50 will be taxed at 20 percent
• Cigars with an invoice price of more than $2.50 will pay the 50-cent tax

Previously, the first two options existed, but there was no limit. Any cigar that had an invoice price of more than 12 paid the 20 percent rate. The more expensive a cigar is, the more the tax cap should benefit a consumer. For example, using industry standard margins, halfwheel estimates that a cigar with an MSRP will be charged 50 cents instead of the previous 90 cents, but a cigar with an MSRP of $25 will be assessed the 50 cents instead of the previous amount of $2.50.

Further adding to the uniqueness of the state’s tobacco taxes, this change might be temporary. The bill only added the tax cap through 2027, meaning that without further changes, the old tax structure will resume on Jan. 1, 2028.

For consumers hoping to pay less for a cigar than they did yesterday, it could be some time before retailers adjust. Retailers have already been assessed the taxes on the cigars that are on their shelves, but the new lower tax rates will apply to future orders.

Source: https://halfwheel.com/louisianas-cigar-tax-cap-takes-effect/459529/