What is Virginia’s tobacco products tax?
It’s a tax on the sale of tobacco products other than cigarettes.
- Loose leaf tobacco products:
- 42¢ for each unit less than 4 ounces
- 80¢ for each unit that is at least 4 ounces but not more than 8 ounces
- $1.40 for each unit more than 8 ounces but not more than 24 ounces
- Units that exceed 24 ounces are taxed at 42¢ per unit plus 42¢ for each 4 ounce increment that exceeds 16 ounces
- Moist snuff - 36¢ per ounce
- Liquid nicotine (“vape juice”) - 6.6¢ per milliliter
- Heated tobacco products - 2.25¢ per stick
- All other tobacco products - 20% of the manufacturer’s sales price
- Roll-your-own tobacco remains taxed at 10% of the manufacturer's sales price
A taxable unit of loose leaf tobacco is the unit manufactured for the intended sale at retail to an individual consumer.
Cigarettes are subject to Virginia’s cigarette tax. The small cigars known as “bidis” or “beadies” are legally considered cigarettes in Virginia, and are also subject to the cigarette tax.
Roll-your-own tobacco is subject to Virginia’s cigarette tax. However, tax on these products are administered as if it was tobacco products tax.
Money collected from the tobacco products tax is dedicated to the Virginia Health Care Fund.
Who is liable for tobacco products tax?
Tobacco product distributors and certain remote retail sellers are subject to the tax. All distributors and remote retail sellers must be licensed by Virginia Tax. A distributor is a business who
- makes, manufactures, or fabricates tobacco products in Virginia for sale in Virginia
- ships tobacco products to retail dealers in Virginia to be sold by those retail dealers in Virginia
Any retail dealer in Virginia in possession of untaxed tobacco products is also considered a distributor.
Beginning January 1, 2021, a distributor also includes any non-Virginia company who ships tobacco products to wholesale or retail customers in Virginia and meets certain sales volume thresholds during the current or previous year:
- $100,000 in revenue, or
- 200 separate transactions.
For retail sales of cigars and pipe tobacco, see Remote retail sellers below.
The tax is due when the products are sold, and should be stated separately on any receipt of invoice provided to the customer.
No tax is due if the products are sold to another licensed distributor. In this case, the distributor who purchases the products is liable for the tax.
Remote retail sellers
There are 2 types of remote retail sellers in Virginia. These include:
- In-state sellers who take orders for cigars or pipe tobacco over the internet, over the phone, by mail or similar channels, or who ship their products directly to the consumer;
- Out-of-state sellers who take orders for cigars or pipe tobacco over the internet, over the phone, by mail or similar channels, or who ship their products directly to the consumer, and meet certain sales volume thresholds during the current or previous year:
- $100,000 in revenue, or
- 200 separate transactions
Remote retail sellers must be licensed by Virginia Tax, Remote retail sellers are liable for the tax, and should calculate the amount of tax due based on the actual cost of the cigars or pipe tobacco. If the actual cost is not available, calculate based on the actual cost of the product over the 12-months prior to the year of the sale.
What tobacco products are subject to this tax?
- Cigars as defined in Section 5702 of the Internal Revenue Code
- Pipe tobacco as defined in Section 5702 of the Internal Revenue Code
- Moist snuff is defined as any finely cut, ground, or powdered tobacco that is not intended to be smoked but does not include any tobacco intended to be placed in the nasal cavity. Moist snuff includes items such as snus and dissolvable tobacco products.
- Liquid nicotine is any liquid or other substance containing nicotine in any concentration that is sold, marketed, or intended for use in a nicotine vapor product.
- Loose leaf tobacco means any leaf tobacco that is not intended to be smoked, but shall not include moist snuff
- Heated tobacco products are any products containing tobacco that produce an inhalable aerosol by heating the tobacco, rather than burning it. The tax applies regardless of the type of device or combustion source used to heat the tobacco. Heated tobacco products differ from vaping products because heated tobacco products actually use tobacco, rather than just nicotine. They differ from traditional tobacco smoking products because the tobacco is only heated, not burned.
Roll-your-own tobacco means any tobacco which, because of its appearance, type, packaging, or labeling is suitable for use and likely to be offered to, or purchased by, consumers as tobacco for making cigarettes. Although roll-your-own tobacco is subject to the cigarette tax, the tax on roll-your-own tobacco is administered in the same manner as the tobacco products tax.
Roll-your-own cigarette machines
Some tobacco shops and cigarette retailers may have installed "self-serve" cigarette machines that allow the customer to make their own cigarettes. These establishments are considered cigarette manufacturers. You’ll find more information on our cigarette manufacturers page.
Complete the following and send it to us:
- Form TT-1 Application for Cigarette Stamping Permit and Tobacco Products Tax Distributor's License
- TT-1 Schedule A Personal Data Sheet
There is an application fee of $600 due with the application.
Criminal background checks are also required for:
- The distributor’s “principle operatives”:
- any officer
- any director
- any manager
- sole proprietor
- any other person with 10% or more ownership interest.
- Anyone who has control over the purchase, storage, sale or distribution of cigarettes and other tobacco products; or
- Anyone who has control over compliance with cigarette or tobacco products tax laws.
Any person who assumes one of these roles after the initial application will need to submit a Schedule A within 10 days of assuming the role, and apply for a background check within 30 days. There is a $100 fee for every background check done after the initial application is approved.
Retail dealers purchasing OTP from a distributor not on the current licensed distributors list must apply for their own license.
Other tobacco products return
All distributors must file Form TT-8 monthly. Returns are due on the 20th day of the month following the month that the sales and purchases were made. For example, the April return is due May 20. A return must be filed for each month, even if no tax is due.
If you are unable to file and pay electronically, you may request a temporary waiver by submitting a waiver request form.
Roll-your-own tobacco reports
In addition to their TT-8, distributors selling roll-your-own tobacco are also required to file a monthly report, Form AG-1 or AG-2, with the Office of the Attorney General. Forms and additional information can be found on the Office of the Attorney General website.
Manufacturers tobacco shipments report
Every tobacco manufacturer who ships tobacco products into Virginia must file an annual report with Virginia Tax. This report should include:
- name and address of every person tobacco products were shipped to
- the type, brand and quantity of products shipped to each participant
- total number of units and weight of each product, for products that are taxed based on weight
This report should cover all tobacco products except cigarettes. There is no specific form or mandatory template for this report. You are free to create your own template, so long as all required information is provided, and all data points are presented in a reasonable format. We would prefer reports be Excel spreadsheets or Microsoft Access databases, but will accept hard copy reports.
Reports are due February 20, and should be mailed to:
Virginia Department of Taxation
P.O. Box 715
Richmond, VA 23218-0715
For more assistance, please call 804.371.0730