S 2360Administration & Compliance

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

This bill lowers the state tax by 75% for tobacco products that the federal government certifies as less harmful than cigarettes.

Introduced24 Yea14 Nay0 Not voting

Population
Affected

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Introduced Jan 30, 2026Committee Senate Finance

Plain-English Summary

This legislation amends the Rhode Island General Laws regarding taxes on cigarettes and tobacco products. Specifically, it introduces a significant tax reduction for products classified as "modified risk tobacco products." Under this bill, any tobacco product that the United States Department of Health and Human Services determines to be a "modified risk" product—meaning it is sold to reduce harm or the risk of tobacco-related disease—will have its state tax reduced by seventy-five percent (75%). The standard tax rate for traditional cigarettes and other non-exempt tobacco products remains unchanged.

For younger readers

This bill changes the rules about how much extra money, called tax, people have to pay when they buy tobacco products. Usually, the government puts a high tax on cigarettes because they are very bad for your health. This bill says that if the government decides a specific kind of tobacco product is safer or less likely to make you sick compared to normal cigarettes, the store won't have to pay as much tax on it. Specifically, the tax will be much lower for these safer products.

Who & Where It Applies

Impacted groups

Tobacco consumersTobacco distributorsConvenience store ownersDepartment of Health and Human ServicesRI Division of Taxation

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 traditional cigarettes more affordable for low-income individuals suffering from addiction.
Encourages a shift toward science-based health policy by aligning state taxation with federal health findings regarding risk levels.
Could potentially reduce long-term strain on the public healthcare system and safety net by lowering the incidence of severe tobacco-related diseases.
Reduces state tax revenue that is often used to fund public services and health programs, effectively giving a tax break to tobacco corporations.
May inadvertently encourage the use of nicotine products among youth or non-smokers by lowering the price point, leading to new addictions.
Relies on federal designations that may not fully account for the long-term social and health impacts of new tobacco technologies on vulnerable communities.

For Conservatives

Reduces the tax burden on businesses and consumers, promoting economic freedom and allowing market participants to keep more of their money.
Encourages private sector innovation by financially rewarding companies that invest in developing safer products.
Moves away from a "one-size-fits-all" punitive tax structure, recognizing that not all products carry the same risks.
Surrenders state sovereignty by tethering Rhode Island tax rates directly to the decisions of unelected federal bureaucrats at the FDA and HHS.
Complicates the tax code by creating different tiers of taxation, potentially increasing administrative burdens for businesses to prove compliance.
Creates a system where the government picks winners and losers in the marketplace based on federal definitions rather than free market principles.

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.