Tobacco and Vapor Products Tax

How to Register

The Department of Revenue administers Tobacco Taxes on cigarettes, other tobacco products, snuff, and vapor products. Cigarette and Tobacco Licenses are obtained online through the Kentucky One Stop Business Portal.

House Bill 249 - Open Vaping Systems (Effective July 1, 2021)

During the 2021 Legislative Session, KRS 138.140 was amended to modify the taxation of open vaping systems. When the components of an open vaping system are sold separately without the liquid solution, the open vaping system tax rate is not applicable. However, vaping kit sales that include the liquid solution or liquid solution sold separately continues to be subject to the open vaping systems tax rate of fifteen percent (15%).

Effective March 27, 2021: Prevent All Cigarette Trafficking (PACT) Act Reporting Requirements for Electronic Nicotine Delivery Systems (ENDS)

If you sell, transfer, or ship for-profit Electronic Nicotine Delivery Systems (ENDS) into Kentucky from outside the state, you are required to register and file monthly reports with the Department of Revenue.

Also, if you sell, transfer, or ship for-profit cigarettes, smokeless tobacco products, or ENDS in interstate commerce, you must register and file monthly reports with the tobacco tax administrator of the state where the shipment is delivered.

Current Kentucky filers, who are now filing and reporting on sales of vapor products, should not be affected by this new federal requirement as the Kentucky electronic filing format already captures all data needed at this time. These Kentucky filers reporting all ENDS products on their tax returns are already meeting all of their Kentucky state filing requirements.

However, if you need registration information, please contact the Tobacco Tax Section at (502) 564-6823 (Option 2) to begin the initial process. You may also review this page to find additional information on the electronic registration and filing requirements.

What are ENDS?

ENDS are defined as any electronic device that delivers nicotine, flavor, or any other substance to the user inhaling from the device. ENDS include:

An eCigarette, eHookah, eCigar, vape pen, advanced refillable personal vaporizer, electronic pipe; and
Any component, liquid, part, or accessory of an ENDS device, without regard to whether the component, liquid, part, or accessory is sold separately from the device.

The Legislation

The federal Prevent All Cigarette Trafficking (PACT) Act became effective on June 29, 2010. The PACT Act amends the federal Jenkins Act (15 U.S.C. section 375-378). The Preventing Online Sales of E-Cigarettes to Children Act (2021 Omnibus Appropriations Bill H.R. 133 section 601) amends the definition of cigarette to include electronic nicotine delivery systems (ENDS).

2020 Legislative Changes

Cigarette Tax Stamp Deferred Payment

Effective August 1, 2020, a cigarette wholesaler may choose to defer payment on a stamp order up to 10 days. In order to defer payment, the wholesaler must have a completely executed surety bond (Form 73A530) on file with the DOR. The surety bond must be in an amount that is equal to or greater than the tax, interest, penalties, and collection fees associated with any new or pending-payment stamp order. If the surety bond is not greater than the total of tax, interest, penalties, or collection fees, the wholesaler must pay in full at the time of that particular order. An exception to the payment deferral is during the month of June when stamp orders cannot be deferred beyond June 25th to ensure payment on all stamp orders before fiscal year end.

Cigarette Tax Bond Form73A350 (8-20).pdf

Bond Calculation Template.xlsx

Vapor Products Tax, Licensing, and Electronic Filing Submission

House Bill (HB) 351 was enacted and established a tax on vapor products. Effective August 1, 2020, the vapor products tax rate on closed vaping systems is $1.50 per cartridge and the rate on open vaping systems is 15% of the actual price at which the distributor sells the product. Taxable items include both nicotine and non-nicotine products as provided in the following definitions.

Closed Vapor Cartridge

This is a pre-filled disposable cartridge used with or in a noncombustible product using a heating element, battery, power source, electronic circuit, or other electronic, chemical, or mechanical means. The cartridge can be of any shape or size and delivers vaporized or aerosolized nicotine, non-nicotine substances, or other materials to users who are inhaling from products such as any electronic cigarette, electronic cigar, electronic cigarillo, electronic pipe, or other similar product or device and every variation thereof, regardless of whether marketed as such. These cartridges contain nicotine or non-nicotine substances or other material consumed during the process of vaporization or aerosolization.

Open Vaping System

These non-combustible products use a heating element, battery, power source, electronic circuit, or other electronic, chemical, or mechanical means. The product can be of any shape or size and includes all component parts and accessories that use a refillable liquid solution to deliver vaporized or aerosolized nicotine, non-nicotine substances, or other materials to users who may be inhaling from the product such as any electronic cigarette, electronic cigar, electronic cigarillo, electronic pipe, or similar product or device and every variation thereof, regardless of whether marketed as such. This includes any liquid solution that is intended to be used with the product.

All distributors purchasing untaxed vapor products who currently do not have a tobacco license must register and obtain a license through the Kentucky Business One Stop online portal. Multiple options are available to assist with meeting the electronic monthly reporting requirements.

Tobacco and Vapor Products Distributors

The distribution of untaxed tobacco products without first obtaining a license from the Department of Revenue is prohibited. Retailers are prohibited from buying untaxed tobacco products unless the retailer is a licensed retail distributor who directly pays the applicable excise tax on its purchase price of tobacco products to the Department of Revenue.

Licensees 7-28-2021.pdf

Electronic Filing Mandate

Pursuant to KY Regulation 103 KAR 41:220 mandating electronic filing, all activity related to cigarettes and tobacco products must be submitted electronically through the KY Business One Stop Portal effective for the periods on or after January 1, 2020. This requirement includes Manufacturing reports, licensing, cigarette stamp purchases, and licensees' filing of monthly returns.

Cigarette Tax Stamps

Effective April 1, 2020, the Department of Revenue will no longer be providing the option to purchase cigarette tax stamps in the quantity of pads for the packs of 20 cigarettes. This decision is due to the low volume of purchases of the pads and the increasing expense of maintaining stamp supplies in this pad format.

Helpful Links

Tobacco Tax Laws: KRS Chapter 138

Federation of Tax Administrators (FTA)

Pay Tobacco and Vapor Products Taxes

Electronic Filing and Payment

All tax payment and e-file options

E-filing Assistance

We have information to assist you in creating the XML file layout necessary in creating your tax return. Please see the EDI Guides below as well as the technology guides containing examples of the file layout.

	Kentucky Cigarette XML Schema (2017, V1.2) (12/4/2017)	Kentucky Tobacco XML Scheme (2017, V1.4) (01/02/2020)
	Kentucky Cigarette EDI Guide (11/01/2018)	Kentucky Tobacco EDI Guide (V1.4) (12/30/2019)
	Kentucky Cigarette EDI Guide FAQ (10/22/2018)	Kentucky Tobacco EDI Guide FAQ (7/17/2017)
	Kentucky Cigarette Transaction Flowchart (10/22/2018)	Kentucky Tobacco Transaction Flowchart (12/21/2017)
	Excel Template for Cigarettes and Tobacco Filing (3/15/2021)	Training Videos (01/13/2020)
	UPC Brand Code Table (5/6/20)

Effective for August 2020 Filing Periods and After

	Kentucky Cigarette EDI Guide (7/27/2020)	Kentucky Tobacco Products EDI Guide (7/27/2020)
	Kentucky Cigarette XML Schema (2017, V1.3) (7/27/2020)	Kentucky Tobacco XML Schema (2017, V1.5) (7/28/2020)

Cigarettes

The cigarette tax is paid through the purchase of stamps from the Department of Revenue. These stamps must be affixed to each package of cigarettes as evidence that the tax was paid. The tax rate on packs of 20 cigarettes is $1.10 (proportionate rate for packs of 25). The Cigarette Enforcement and Administration Fee is three tenths of a cent ($.003) for each package of cigarettes stamped for sale in Kentucky.

Other Tobacco Products

Any smokeless tobacco products, smoking tobacco, chewing tobacco, and any kind or form of tobacco prepared in a manner suitable for chewing or smoking, or both, or any kind or form of tobacco that is suitable to be placed in an individual’s oral cavity, but does not include cigarettes or reference cigarettes.

Tobacco products, other than snuff and chewing tobacco, are taxed at the rate of 15 percent of the actual price for which the distributor sells the product. Retail distributors are taxed at 15 percent of their total purchase price of the untaxed tobacco products.

Snuff

Tobacco that is finely cut, ground, or powdered and is not for smoking. Snuff includes snus and dry snuff. Snuff is taxed at the rate of 19 cents per each 1-1/2 ounces or portion thereof by net weight.

Chewing Tobacco

Any leaf tobacco that is not intended to be smoked and includes loose leaf chewing tobacco, plug chewing tobacco, and twist chewing tobacco, but chewing tobacco does not include snuff. Chewing tobacco is taxed at the following rates:

19 cents per each single unit (net weight less than 4 ounces) sold. For retail distributors, the tax is levied on purchases of untaxed chewing tobacco at the same rate.
40 cents per each half-pound unit (net weight of at least 4 ounces but not more than 8 ounces) sold. For retail distributors, the tax is levied on purchases of untaxed chewing tobacco at the same rate.
65 cents per each pound unit (net weight of more than 8 ounces but not more than 16 ounces) sold. For retail distributors the tax is levied on purchases of untaxed chewing tobacco at the same rate.
If the container, pouch, or package on which the tax is levied contains more than 16 ounces by net weight, the rate that shall be applied to the unit shall equal the sum of 65 cents plus 19 cents for each increment of 4 ounces or portion thereof exceeding 16 ounces sold. For retail distributors the tax is levied on purchases of untaxed chewing tobacco at the same rate.

Master Settlement Agreement Tobacco Directory

KRS 131.610 requires the Department of Revenue to provide a directory of all participating manufacturers and non-participating manufacturers that have been certified by the Attorney General as being in compliance with the Master Settlement Agreement and Model Act. The Department of Revenue will update the directory to add or remove a tobacco manufacturer or brand family that does not meet certification requirements as determined by the Attorney General. The Department of Revenue will notify wholesalers/distributors when there have been changes to the directory.

Pursuant to KRS 131.612, it shall be unlawful for any wholesaler/distributor to affix a stamp to a package or other container of cigarettes or distribute such cigarettes of a tobacco product manufacturer or brand family not included in the directory. Unlawfully stamped cigarettes will be considered contraband in the hands of the wholesaler/distributor and will be subject to seizure and destruction. Civil or criminal penalties may also be pursued against the wholesaler/distributor.

Cigarettes and “roll your own” tobacco that have been removed from the directory are considered contraband and will be subject to seizure and destruction even if a stamp had been applied.

If you have questions concerning the Master Settlement Agreement, certification or brands, please email the Office of the Attorney General.

Tobacco Directories

The cigarette brands listed on the links below have been certified by the Office of the Attorney General as being in compliance with the MSA and Model Act. The Notice of Removal lists indicate manufacturers and brands that are no longer certified by the Office of the Attorney General as being in compliance with the Master Settlement Agreement and Model Act.

Participating Manufacturers (7/12/21)
Non-Participating Manufacturers (7/1/21)
View All Tobacco Directories

Notices of Removal

2020 Notice of Removal for NPM Directory (3/17/20)