Nicotine pouches in New York will now be taxed like other tobacco products such as cigars, following Governor Kathy Hochul’s signing of the state’s $268 billion budget into law on Thursday. The enacted budget brings alternative nicotine products under the state’s existing 75 percent wholesale tobacco tax. Beginning in fiscal year 2028, the levy is expected to channel an additional $50 million in annual tobacco tax revenues into the Health Care Reform Act fund. The tax differs in structure from the one applied to cigarettes, which are taxed at $5.35 per pack in New York.
The change treats pouches such as Zyn and On! the same as conventional tobacco products despite their containing no tobacco leaf. State Budget Director Blake Washington has characterized nicotine pouches as a “public health concern,” describing cigarettes and pouches as “a distinction without a difference.” Tobacco control advocates have similarly argued that taxing all nicotine products broadly discourages addiction and protects youth, and Hochul has made youth nicotine access a prominent part of her public health agenda.
In response, PMI U.S., the American arm of Philip Morris International, issued an unattributed statement saying the company was disappointed not only by the 75 percent wholesale tax but by what it called the state’s disregard for a more fiscally responsible alternative that would have raised more revenue with fewer unintended consequences for small businesses. The statement argued the tax moves in the wrong direction on affordability and public health, contending it will raise costs and discourage adult smokers from switching to better alternatives, thereby keeping more people on cigarettes. It further warned that the tax would fuel illicit trade by shifting demand to unregulated markets lacking safeguards and age verification, which it said would undermine the governor’s stated goal of preventing youth access.
