Little cigars now taxed as cigarettes

In July 2008, the Commonwealth of Massachusetts changed its definition of cigarettes to include little cigars. This changed the way little cigars are taxed. This change was made in a provision in the Fiscal Year 2009 state budget.

Little cigars resemble cigarettes in nearly every way (shape, length, use of filters, and size and shape of the pack), except that traditionally, cigarettes have been wrapped in paper while little cigars have been wrapped in substances that contain at least some tobacco. 

Prior to July 13, 2008, little cigars were taxed similarly to large cigars, despite the fact that they were more similar to cigarettes than cigars. The Massachusetts tax for cigars is 30% of the wholesale price.

Because of the change in definition, little cigars are now taxed as cigarettes. This means that the $.39 federal tax and the $2.51 Massachusetts excise tax will apply to little cigars. The cigarette tax rate is higher than the cigar tax rate, so little cigar users will experience a price increase.

Common brands of little cigars include Phillies and Swisher Sweet. For a more complete list of impacted brands, visit the Department of Revenue’s website at http://www.mass.gov/Ador/docs/dor/Cigarette/PDFs/lilcigars.pdf.

Small cigars are different than little cigars. Because small cigars, cigarillos, and blunt cigars (eg. Black and Milds and other similar products) more closely resemble traditional cigars, they were not included in the budget language. Small cigars, therefore, are not impacted by this change. 

For more information on the new tax classification contact the Department of Revenue at (617) 887-5090 or visit the DOR website at www.mass.gov/dor.