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Sin taxes keep expanding, increasing across the country

July 5, 2013

We just celebrated America's 237th birthday, but the land of the free is far from that when it comes to bad habits.

More, and higher, sin taxes are regularly showing up in state tax codes.

The most recent sin tax hike showed up on July 1 — the start of most states' fiscal year and the usual effective date for new laws — in Minnesota.

It now is much more expensive to be a smoker in the Land of 10,000 Lakes. Minnesota's tax on cancer sticks more than doubled this month, going from $1.23 to $2.83 a pack.

New York still leads the state cigarette tax list with its levy of $4.35 per pack plus another $1.50 per pack tax if you buy your smokes in the Big Apple.

But Minnesota's increase now gives the state the sixth highest cigarette tax in the nation,
according to the Campaign for Tobacco-Free Kids.

State cigarette excise taxes effective July 1 2013 via Tobacco Free KidsClick image for larger map and more cigarette tax info from TobaccoFreeKids.org

The anti-smoking, pro-tobacco-tax trend is not new. 

In 2012, Illinois more than doubled its excise tax on cigarettes to
$1.98 per pack. When you count Chicago's local tax, the total cigarette tax on a pack in the Windy City comes to $4.66.

And remember, you'll also owe your state and local sales taxes on the smokes, too.

Paying more for potent potables: Then there's the price of a cocktail.

Washington State privatized liquor sales last year. While that typically produces lower prices, the Evergreen State's tax increase on distilled spirits of up to $35.22 per gallon offset any consumer savings.

Why? Because restaurants and retailers that must pay the tax typically pass along their costs on a per-drink or by-the-bottle basis to customers.

Washington's excise tax on liquor is the highest in the nation.

12 states that depend on sin: Washington's alcohol excise tax is high enough to help earn it a place in what Bloomberg is calling the Dirty Dozen of sin taxation.

These are the 12 states, according to the news service, with the greatest percentage of total tax revenue derived from so-called sins, typically booze, tobacco, certain food and beverages and betting.

Leading the list is New Hampshire, which ironically has among the lowest sin tax rates in the country. But, says Bloomberg, the Live Free or Die State's revenue from bad habits accounted for 10.2 percent of the state's total tax revenue in 2012.

That was the largest percentage of money from sin taxes of any state.

Dollar-wise, the sin tax collection in New Hampshire last year came to $225.4 million.

The 11 states following New Hampshire in Bloomberg's look at sin tax dependent jurisdictions are Rhode Island, South Dakota, Texas, Montana, Washington, Michigan, Oklahoma, Pennsylvania, Wisconsin, Maine and Delaware.

Do you think sin taxes work? Or are they just easy ways for states to collect more revenue? If you live where it's easy to cross a border and pay a lower alcohol or tobacco tax, do you take that sinful shopping trip?

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TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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