H 7804Administration & Compliance

Taxation - Cigarette, Other Tobacco Products, and Electronic Nicotine-Delivery System Products

This bill lowers state taxes by 75% on tobacco products that the federal government certifies as less harmful.

Held for study

Population
Affected

Introduced Feb 12, 2026Committee House Finance

Plain-English Summary

This legislation amends the current Rhode Island tax laws regarding cigarettes and tobacco products. Specifically, it introduces a significant tax reduction for products designated as "modified risk tobacco products" by the United States Department of Health and Human Services. If a product is federally recognized to reduce the harm or risk of tobacco-related disease compared to standard commercial tobacco products, the state tax imposed on that product will be reduced by 75%. This creates a lower tax tier for tobacco products deemed less harmful by federal standards.

For younger readers

This law changes how much extra money, called tax, the state charges for certain tobacco products. Usually, the state puts a high tax on cigarettes because they are very bad for your health. This new rule says that if the government in charge of health deciding that a specific product is not as dangerous as regular cigarettes, the store won't have to pay as much tax on it. The tax for these "safer" products would be cut by a huge amount, making them cheaper to buy than regular cigarettes.

Who & Where It Applies

Impacted groups

Tobacco ConsumersTobacco DistributorsConvenience Store OwnersPublic Health OfficialsTaxpayers

Impacted communities

All

Constitutional & Fiscal Check

None Likely

Estimated cost

None

Estimated revenue

Amount unknown

Bill Analysis

Both viewpoints

For Progressives

Promotes harm reduction by making safer alternatives to combustible cigarettes more financially accessible to low-income individuals suffering from addiction.
Aligns state tax policy with federal scientific findings, encouraging a shift away from the most lethal forms of tobacco use.
May reduce long-term strain on the public healthcare safety net by incentivizing the use of products associated with lower rates of tobacco-related disease.
Reduces state tax revenue derived from tobacco sales, which could otherwise be used to fund social services or public health education programs.
Provides a financial benefit to tobacco corporations by lowering the cost of their products, potentially increasing their overall sales and profits.
Could inadvertently encourage the use of nicotine products among youth or non-smokers by making these products cheaper.

For Conservatives

Significantly reduces the tax burden on specific consumer goods, allowing citizens to keep more of their money.
Encourages market innovation by financially rewarding companies that develop products deemed less harmful to consumers.
Reduces government interference in the marketplace by lowering the cost of doing business for retailers and distributors of these specific products.
Surrenders state sovereignty by tying Rhode Island tax rates directly to regulatory decisions made by unelected federal bureaucrats in Washington D.C.
Creates a complex, two-tiered tax structure that may be difficult for businesses to navigate and for the state to enforce uniformly.
Relies on federal definitions that are subject to change based on political whims, potentially leading to unstable tax policies.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 8 additions

SECTION 1. Section 44-20-12 of the General Laws in Chapter 44-20 entitled "Cigarette, Other Tobacco Products, and Electronic Nicotine-Delivery System Products" is hereby amended to read as follows: 44-20-12. Tax imposed on cigarettes sold.

(a) A tax is imposed on all cigarettes sold or held for sale in the state. The payment of the tax to be evidenced by stamps, which may be affixed only by licensed distributors to the packages containing such cigarettes. Any cigarettes on which the proper amount of tax provided for in this chapter has been paid, payment being evidenced by the stamp, is not subject to a further tax under this chapter. The tax is at the rate of two hundred twenty-five (225) mills for each cigarette.

(b) Any tax imposed under this chapter shall be reduced by seventy-five percent (75%) for any product the Secretary of the United States Department of Health and Human Services determines to be a modified risk tobacco product pursuant to the federal Food, Drug, and Cosmetic Act, 21 U.S.C § 387k. For the purpose of this section, "modified risk tobacco product" means any tobacco product that is sold or distributed for use to reduce the harm or the risk of tobacco-related disease associated with commercially marketed tobacco products.

SECTION 2. This act shall take effect upon passage.