Indiana’s 2025 Tobacco Tax Increase: Early Evidence from Retail Sales Data

This Fact Sheet was written by Economics for Health and the CDC Foundation. The fact sheet assesses the impact of a recent tobacco tax reform in Indiana using sales data. Specifically, Indiana raised its cigarette tax from $0.995 to $2.995 per pack, doubled its ad valorem e-cigarette tax from 15% to 30%, and raised taxes on other tobacco products in July 2025. The findings show that the price of cigarette packs increased by $2, in line with the tax increase, although the price of premium packs increased by around $2.31. Accordingly, cigarette sales declined by about 12.6 million packs. E-cigarette prices, similarly, increased following the tax reform, while sales declined. Tobacco tax revenues increased substantially, with $170.4 million in new tax revenue between July and December 2025. There researchers did not find any evidence of significant cross-border sales in neighboring countries, contrary to industry claims. The fact sheet concludes with policy recommendations and takeaways from the experience in Indiana for policy makers broadly.

Read the fact sheet here and check out the related blog post here.