2026 Senate File 2480 imposes an excise tax on all alternative nicotine products (“ANPs”) and vapor products in Iowa. This is in addition to the state sales tax and any applicable local option sales tax. The taxes are imposed beginning January 1, 2027.
The first $3 million collected from these taxes annually will be transferred to the Iowa Board of Regents for conducting pediatric cancer research, clinical therapy access, and providing physician-scientist leadership at the University of Iowa Stead Family Children’s Hospital.
List items for ANP and Vapor Product Taxes
Relevant Statutes
Iowa Code sections 453A.1, 453A.42
“Alternative nicotine product” or “ANP” means a product:
- Not consisting of or containing tobacco,
- That provides for the ingestion into the body of nicotine, or a nicotine analog, whether by chewing, absorbing, dissolving, inhaling, snorting, or sniffing, or by any other means.
"Alternative nicotine product" does not include:
- Cigarettes
- Tobacco products
- Vapor products
- A product that is regulated as a drug or device by the United States food and drug administration under chapter V of the Federal Food, Drug, and Cosmetic Act
“Container” means the smallest individual package of ANP that has the FDA labeling required for sale. Examples include but are not limited to
- Packs
- Tins
- Cases
- Boxes
- Cans
- Cartons
- Blister packs
“Delivery sale” means any sale of an alternative nicotine product or a vapor product to a purchaser in this state where the purchaser submits the order for such sale by means of a telephonic or other method of voice transmission, mail or any other delivery service, or the internet or other online service and the alternative nicotine product or vapor product is delivered by use of mail or a delivery service. The sale of an alternative nicotine product or vapor product shall constitute a delivery sale regardless of whether the seller is located in this state. “Delivery sale” does not include a sale to a distributor or retailer of any alternative nicotine product or vapor product not for personal consumption.
“Distributor” means any and each of the following:
- Any person engaged in the business of selling tobacco products, alternative nicotine products, or vapor products in this state who brings, or causes to be brought, into this state from without the state any tobacco products, alternative nicotine products, or vapor products for sale.
- Any person who makes, manufactures, or fabricates tobacco products, alternative nicotine products, or vapor products in this state for sale in this state.
- Any person engaged in the business of selling tobacco products, alternative nicotine products, or vapor products without this state who ships or transports tobacco products, alternative nicotine products, or vapor products to retailers in this state, to be sold by those retailers.
“Nicotine analog” means a substance that has a chemical structure that is substantially similar to nicotine, or that has an effect on the central nervous system that is substantially similar to, or greater than, the effects of nicotine on the central nervous system.
“Retailer” means any person engaged in the business of selling tobacco, tobacco products, alternative nicotine products, or vapor products to ultimate consumers.
“Subjobber” means any person, other than a manufacturer or distributor, who buys tobacco products, alternative nicotine products, or vapor products from a distributor and sells them to persons other than the ultimate consumers.
“Unit” means each individual item for consumption inside a container of ANP. Examples include but are not limited to:
- Pouches
- Sachets
- Toothpicks
- Lozenges
- Gums
- Mints
“Vapor product” means:
- Any noncombustible product
- Which may or may not contain nicotine or a nicotine analog
- That employs a heating element, power source, electronic circuit, or other electronic, chemical, or mechanical means, regardless of shape or size, and
- That can be used to produce vapor from a solution or other substance
“Vapor product” includes but is not limited to the following:
- Electronic cigarettes
- Electronic cigars
- Electronic cigarillos
- Electronic pipes
- Any cartridge or other container of a solution or other substance, which may or may not contain nicotine or a nicotine analog, that is intended to be used with or in an electronic cigarette, electronic cigar, electronic cigarillo, electronic pipe, or similar product or device.
- Any component, part, or accessory of such a product or device that is used during the operation of the product or device when sold in combination with any substance containing nicotine, a nicotine analog, tobacco, or tobacco derivative.
“Vapor product” does not include any of the following:
- A product regulated as a drug or device by the United States Food and Drug Administration under chapter V of the Federal Food, Drug, and Cosmetic Act.
- Any component, part, or accessory of such a product or device that is used during the operation of the product or device when not sold in combination with any substance containing nicotine, a nicotine analog, tobacco, or tobacco derivative.
"Wholesale sales price" means the established price for which a manufacturer sells a tobacco product, alternative nicotine product, or vapor product to a distributor, exclusive of any discount or other reduction.
Relevant Statute
Iowa Code section 453A.43A
The ANP tax is five cents ($0.05) per container with up to 20 units. If a container has more than 20 units, the ANP tax is one-quarter cent ($0.0025) for each unit. The ANP tax does not vary based on nicotine content.
Tax Calculation Examples:
- Container with 15 nicotine pouches: $0.05 tax (1 container x $0.05 tax per container with up to 20 units).
- Container with 20 nicotine pouches: $0.05 tax (1 container x $0.05 tax per container with up to 20 units).
- Container with 25 nicotine pouches: $0.0625 tax (25 units x $0.0025 tax per unit in a container with more than 20 units).
- Value package of five containers, each with 15 nicotine pouches: $0.25 tax (5 containers x $0.05 tax per container with up to 20 units).
- Variety package of ten containers, each with two nicotine pouches: $0.50 tax (10 Containers x $0.05 tax per container with up to 20 units).
The following items are not subject to the ANP tax:
- Pouches and other products that do not contain nicotine or a nicotine analog,
- Smoking cessation products that are regulated as drugs or devices by the federal Food and Drug Administration.
The sale of ANPs must comply with Iowa Code chapter 453A and all other local, state, and federal laws. The ANP tax is in addition to the state sales tax and any local option sales tax.
Relevant Statute
Iowa Code section 453A.43A
The vapor product tax is calculated per milliliter of solution (vape juice). The vapor product tax is five cents ($0.05) per milliliter of a solution containing nicotine or a nicotine analog. A proportionate tax at the same rate applies to any fraction of a milliliter in the container.
Taxable examples:
- Container with 30ml of nicotine vape juice: $1.50 tax (30ml x $0.05 tax rate per milliliter).
- Container with 60ml of nicotine vape juice: $3.00 tax (60ml x $0.05 tax rate per milliliter).
- Container with 100ml of liquid nicotine: $5.00 tax (100ml x $0.05 tax rate per milliliter).
- Vape pen sold with 15.5ml of nicotine vape juice: $0.775 tax (15.5ml x $0.05 tax rate per milliliter, including a proportionate tax rate for a fraction of a milliliter).
All vapor products are subject to regulation, including permitting and reporting requirements and age restrictions. However, the vapor product tax only applies to solutions containing nicotine or a nicotine analog. Items that are not subject to the vapor product tax include:
- Solutions that do not contain nicotine or a nicotine analog
- Vape pens when sold without a solution
- Empty tanks, batteries, coils, cases, and other parts and accessories when sold without a solution
The sale of vapor products must comply with Iowa’s vapor products directory law. The vapor product tax is due on all solutions in Iowa that contain nicotine or a nicotine analog. Selling or offering to sell vapor products in Iowa that are not included in the vapor products directory may result in civil and criminal penalties in addition to any tax due.
The sale of vapor products must otherwise comply with Iowa Code chapter 453A and all other local, state, and federal laws. The vapor product tax is in addition to the state sales tax and any local option sales tax.
Distributors: Businesses that distribute ANPs or vapor products in Iowa must have a valid Iowa distributor permit no later than January 1, 2027. A distributor permit allows the business to distribute tobacco products, ANPs, and vapor products in Iowa. A distributor permit is required to distribute tobacco products prior to January 1, 2027.
Distributors must file returns and pay tax on all ANPs and vapor products they bring or send into Iowa. Returns and payments are due monthly, with the first return and payment due on February 22, 2027. Apply for or renew a permit, file returns, and make payments electronically through GovConnectIowa.
Subjobbers: Businesses, other than distributors, that make non-retail sales of ANPs or vapor products in Iowa must have a valid Iowa subjobber permit no later than January 1, 2027. A subjobber permit allows the business to buy and make non-retail sales of tobacco products, ANPs, and vapor products in Iowa. A subjobber permit is required to buy and make non-retail sales of tobacco products prior to January 1, 2027. Apply for or renew a permit, file returns, and make payments electronically through GovConnectIowa.
Effective January 1, 2027, subjobbers must buy tax-paid ANPs and vapor products for their inventory. Subjobbers must buy this inventory from a distributor or subjobber with a valid Iowa permit. If a subjobber acquires ANPs or vapor products in any way other than buying them from a permitted distributor or subjobber, the subjobber must report and remit the tax on ANPs and vapor products directly to the Department. If a subjobber regularly acquires ANPs or vapor products in any way other than buying them from a permitted distributor or subjobber, the subjobber must obtain a distributor permit, file monthly distributor returns, and remit the tax on ANPs and vapor products monthly.
Retailers: Businesses that make retail sales of ANPs or vapor products must have a valid Iowa retail tobacco permit. A retail tobacco permit allows the retail sale of cigarettes, tobacco products, ANPs, and vapor products in Iowa. A retail tobacco permit is currently required for all businesses that make retail sales of cigarettes, tobacco products, ANPs, and vapor products in Iowa.
Effective January 1, 2027, retailers must buy tax-paid ANPs and vapor products for their inventory. Retailers must buy this inventory from a distributor or subjobber with a valid Iowa permit. If a retailer acquires ANPs or vapor products in any way other than buying them from a permitted distributor or subjobber, the retailer must report and remit the tax on ANPs and vapor products directly to the Department. If a retailer regularly acquires ANPs or vapor products in any way other than buying them from a permitted distributor or subjobber, the retailer must obtain a distributor permit, file monthly distributor returns, and remit the tax on ANPs and vapor products monthly.
The retail sale of ANPs and vapor products is also subject to state sales tax and any applicable local option sales tax. Apply for or renew a permit, file returns, and make payments electronically through GovConnectIowa.
Delivery Sellers: Businesses that make delivery sales of ANPs and vapor products must have a valid Iowa delivery seller permit. A delivery seller permit only allows delivery sales of ANPs and vapor products in Iowa. Delivery sales of cigarettes and tobacco products are prohibited.
A delivery seller must collect and remit the tax on ANPs and vapor products for delivery sales in Iowa, unless the delivery seller purchased tax-paid inventory from an Iowa permitted distributor or subjobber. The delivery seller also must collect and remit the state sales tax and any local option sales tax for delivery sales in Iowa. Apply for or renew a permit, file returns, and make payments electronically through GovConnectIowa.
Under Iowa Code 453A.40, an inventory tax return will be required for all businesses having ANPs or vapor products in their possession and held for resale in Iowa when the new taxes begin. The inventory tax rate is the same as the full excise tax rate on ANPs and vapor products. The inventory tax is due on all ANPs and vapor products in the business’s inventory as of the close of the last business day prior to January 1, 2027. The inventory tax return and payment is due on February 2, 2027. In-state distributors, subjobbers, and retailers must file the inventory tax return and make payment electronically through GovConnectIowa.
Out-of-state distributors and other sellers do not owe inventory tax on their inventories held outside Iowa as of the close of the last business day prior to January 1, 2027. Out-of-state businesses must file returns and pay ANP and vapor product taxes on all ANPs and vapor products sold into Iowa beginning January 1, 2027.