North Carolina’s Tobacco Tax Changes for July 1, 2025
Starting July 1, 2025, North Carolina will implement significant changes to the taxation of snuff and alternative nicotine products. If you sell, distribute, store, or receive these products, these changes will impact your tax rates, licensing, and reporting obligations. Here’s a breakdown of what’s changing and what you need to do to stay compliant.
What’s Changing?
North Carolina’s General Assembly passed Session Law 2023-134 (HB 259), which enacted these changes:
- Snuff tax is changing from cost-based to weight-based
- New tax on alternative nicotine products
- Floor tax due on July 1 inventory
- Updated licensing required for dealers handling alternative nicotine products
New Snuff Tax (Effective July 1, 2025)
Right now, snuff is taxed based on its cost. Starting July 1, that changes to a weight-based system. If you sell or store snuff, you’ll need to calculate and report the tax differently, based on how many ounces are listed on the packaging.
- Old method: Based on cost
- New method:
- $0.40 per ounce, based on the manufacturer’s package weight
- Fractional ounces taxed proportionally
Form to use: B-A-101
New Tax on Alternative Nicotine Products
This is a brand-new tax on products that contain nicotine, natural or synthetic, but doesn’t include tobacco. Examples of these include products that are chewed, absorbed, dissolved, or ingested, and other oral nicotine products. The tax is based on the number of units in each container and applies to all non-vapor alternative nicotine products.
- $0.10 per container (up to 20 units)
- $0.005 per unit (if container has more than 20 units)
Form to use: B-A-102
License Requirements (for Alternative Nicotine Products)
If you make, store, or deliver alternative nicotine products, you must have an OTP License for:
- Each location where a wholesale dealer makes alternative nicotine products
- Each location where a wholesale dealer or an OTP retail dealer receives or stores non-excise tax-paid alternative nicotine products
- Each location from which an OTP retail dealer that is a delivery seller receives or stores non-excise-tax-paid alternative nicotine products for delivery sales.
Form to use: B-A-2 – Apply or update your license
Floor Tax on Inventory (Snuff + Alternative Nicotine)
If you are a wholesale dealer or OTP retail dealer with snuff or alternative nicotine products inventory, on July 1, you must:
- Take inventory
- File the proper floor tax return
- Pay the difference in tax based on the new rates
- File by July 20, 2025
Forms to use:
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This analysis is intended for informational purposes only and is not tax advice. For tax advice, consult your tax adviser. See the full disclaimer here
Chris Roy
Excise Tax Subject Matter Expert