Illinois is the latest U.S. state to implement a tax cap on premium handmade cigars after Governor JB Pritzker signed the state’s FY2027 budget legislation into law this week. The measure caps state tax on premium handmade cigars at $0.75 per cigar and applies to both in-state and remote sales, beginning January 1, 2027. Industry groups said the change is intended to reduce the tax burden on premium cigar retailers and consumers while improving tax parity within the category.
The legislation follows years of advocacy by the Premium Cigar Association, Cigar Rights of America, and the Cigar Association of America. Industry representatives said the successful campaign was supported by economic analysis developed by the PCA and CAA examining the projected effects of cigar tax caps.