(The Center Square) – Quitting smoking has health benefits but the trend of less Wisconsin residents smoking cigarettes led to a nearly $370 million drop in cigarette tax last fiscal year, which ended in June 2025.
That amounted to an 8.2% drop in tax collections and the lowest cigarette tax collections on an inflation-adjusted basis since 1992 after the revenue peaked at $950.9 million in 2010, according to a new report from Wisconsin Policy Forum.
“Wisconsin’s massive cigarette tax increases in 2008 and 2009, adopted during a time of enormous strain on state finances, generated substantial revenue for the state’s main fund,” the report said. “They may also have contributed to our state’s long-term decline in smoking, which has been a major benefit for the state.
“Yet developments since then underscore how these two outcomes actually exist in tension. Using tax policy to reduce rates of use of a harmful substance may achieve that goal, but at the expense of diminishing a key source of revenue to fund state priorities.”
Wisconsin is unique in that it only taxes vapor liquid when it is sold along with a vapor product or device, not alone. The tax is 36 cents per four-pack of vaping cartridges and the state’s e-cigarette tax went from collecting $1.3 million when it began in fiscal year 2020 to $8.1 million in fiscal 2025.
At the start of the year, 34 states had a vaping tax.
“As our state increasingly trades cigarette tax revenues for vapor tax revenues, one implication is that the role of tobacco and nicotine excise taxes is dwindling as a contributor to the state’s general fund,” the report said. “As recently as 2010, nearly $6 out of every $100 that went into the state’s general fund, came from these taxes. That share has since declined from 5.8% in 2010 to 2.3% in 2024.”
