Top Takeaways:

• Maine has approved significant tobacco tax increases, raising cigarette taxes from $2 to $3.50 per pack and cigar taxes from 43% to 75% of wholesale value.
• The measure, part of Governor Janet Mills’ 2025–2026 budget, will give Maine some of the highest tobacco tax rates in the country.
• The new law includes an automatic adjustment clause that links other tobacco taxes to future changes in the cigarette tax rate.

Maine is set to dramatically increase its nicotine product taxes under a new state budget signed into law by Governor Janet Mills, marking the state’s first hike in tobacco excise rates since 2005 and putting it among the most heavily taxed states for tobacco products nationwide.

Beginning January 5, 2026, the tax on cigarettes will rise from $2 to $3.50 per pack. Taxes on cigars will jump from 43% to 75% of the wholesale price, while taxes on smokeless and chewing tobacco will also increase. The legislation also includes a provision to automatically adjust taxes on other tobacco products, including cigars, in line with any future increases in the cigarette tax.

Industry experts say the impact will be particularly sharp for cigar retailers and adult consumers. According to Halfwheel, a cigar with a suggested retail price of $9.50 would see its tax rise from $2.04 to $3.56. A $16 cigar could carry a tax burden of around $6, up from $3.44 under current law.

The increases were part of Mills’ $10.4 billion two-year budget proposal for 2025–2026, which framed the tax hikes as both a public health measure and a way to bring Maine’s tax rates more in line with other states in the region.

“We know tobacco use is a leading cause of preventable death,” Mills said in support of the measure earlier this year. “This change will help deter use, particularly among young people, while also supporting critical public health investments.”

Before the change, Maine had the lowest cigarette tax rate in New England. The increase will now tie the state with New York and Alaska for the sixth-highest cigarette tax in the nation, according to the Campaign for Tobacco-Free Kids. For cigars, the change will make Maine second only to Utah in retail tax burden, where cigars are taxed at 86% with no cap.

The tax hikes have been met with concern from tobacco retailers and small business owners, who warn that such steep increases could drive consumers to purchase products online or across state lines. “Maine risks losing revenue as consumers seek more affordable alternatives outside the state,” said one retail representative, noting that neighboring New Hampshire has significantly lower cigar taxes.

Health advocates, however, welcomed the move. The American Cancer Society Cancer Action Network praised the increase, calling it a necessary step toward reducing tobacco-related illnesses. “Raising tobacco taxes is one of the most effective ways to reduce smoking, especially among youth,” the organization said in a statement.

The automatic adjustment provision embedded in the law could make future tax increases easier to implement, allowing other tobacco products to scale proportionally with future hikes to the cigarette tax.