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Tobacco Tax and Settlement
RSA Chapter 78

The Tobacco Tax is a direct tax upon the consumer at retail. However, it is pre-collected and paid by the wholesaler for the purpose of convenience and facility. It is presumed the Tobacco Tax has been pre-collected and paid by the wholesaler by the affixing of a tobacco tax stamp on the tobacco product. Consumers who purchase unstamped tobacco products will be taxed directly for the Tobacco Tax on such product. The Tobacco Tax was first enacted in 1939.

Originally the tax was based upon the value at the usual selling price of all tobacco products. In 1975, the tax was changed to a flat rate of $0.12 per package of 20 cigarettes. At that time, there was no tax on other tobacco products. Over the next 15 years the tax was increased from $0.12 to $0.25 per package. The current Tobacco tax rate is $1.78 for each package containing 20 cigarettes or at a rate proportional to such rate for packages containing more or less than 20 cigarettes. In 1991, the Legislature enacted a tax on tobacco products other than cigarettes (smokeless tobacco tax) at the rate "proportional to the cigarette tax, having such ratio to the usual wholesale price of the tobacco product other than cigarettes as the cigarette tax bears to the usual wholesale price of the cigarettes." In 2003, the smokeless tobacco tax was changed to 19% of the wholesale sales price. The smokeless tobacco tax rate was changed again in 2009 and then in 2010 to its current rate of 65.03%. Wholesalers are required to report their tax liability for the collection of the smokeless tobacco tax on a monthly basis. The return is due on or before the fifteenth day of the month following the end of the reporting period. Wholesalers may file quarterly, but permission to file quarterly must be pre-approved by the Department in writing.


In 1998 NH joined the nationwide tobacco lawsuit. The resulting Master Settlement Agreement (MSA) ended state litigations against the tobacco companies. The MSA establishes the base amount to be paid to each state each year. However, the amount actually paid changes each year based on variables and adjustment factors set out in the MSA, with the most significant being volume adjustments. The State's annual payment to be received in April is estimated at %44.2 million for FY11. In accordance with Chapter 263, Laws of 2007, the first $40 million is deposited in the ETF and the balance deposited in the General Fund.


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