Nicotine Products

Nicotine Products Tax

 E-cigarettes, vapes, nicotine pouches, and other products which contain nicotine, but do not contain tobacco, are subject to a nicotine products tax. The tax is a percentage of the manufacturer’s list price. A nicotine product is a product that contains nicotine derived from tobacco or created synthetically that is intended for human consumption, whether by vaporizing, chewing, smoking, absorbing, dissolving, inhaling, snorting, sniffing, aerosolizing, or by any other means and is not a cigarette, a tobacco product as defined in section 39-28.5-101(5), C.R.S., or a drug, device or combination product authorized for sale by the US Department of Health and Human Services, as defined in the Federal Food, Drug and Cosmetic Act 21 U.S.C. Sec. 301 et seq.

A modified risk nicotine product is a nicotine product for which the Department of Health and Human Services has issued an order authorizing the product to be commercially sold as a modified risk product in accordance with 21 U.S.C. sec. 387k et seq.  More information is available at FDA.gov.  

Use the tax rate from the table below for your reporting period:

Period

Nicotine Products 

Non-Modified Risk)

Tax Rates

Modified Risk 

Nicotine Products

Tax Rate

Calendar Year 2021 30% 15%
Calendar Year 2022 35% 17.5%

January 1, 2023 through

June 30, 2024

50% 25%

July 1, 2024 through

June 30, 2027

56% 28%
July 1, 2027 and later 62% 31%

 

Untaxed Nicotine Products

Anyone in possession of nicotine products on which the excise tax is not paid by a Colorado licensed distributor must pay the Colorado excise tax within 30 days of receiving the product in the state. This includes nicotine products such as e-cigarettes and other vaping products ordered on the internet, by mail, or by phone.

Payment can be made with the Nicotine Products Tax Return for Unlicensed Activity (DR 0226). Colorado statutes state that failure to pay the excise tax within 30 days can result in a 500% penalty, plus tax and interest. Nicotine products are also subject to sales or use taxes. Payment of the tax does NOT change the existing requirement that the first person or entity to bring any nicotine product into Colorado must be licensed as a nicotine products distributor.