Unicameral Update
Lawmakers recently gave first-round approval to a bill intended to close a gap in the state’s tobacco tax policies.
The state excise tax on cigars, cheroots and stogies currently is 20% of the purchase price paid by the first owner or the price at which the first owner who made the products sells them to others.
Fremont Sen. Dave Wordekemper, sponsor of LB212, said the proposal is meant to help Nebraska cigar shops compete with online retailers, which currently are not required to collect the tax.
As introduced last session, LB212 would have capped the tax at 50 cents per item. However, Wordekemper said, the original proposal would have reduced state revenue.
A Revenue Committee amendment, adopted 43-0, replaced the bill. It instead would require remote retail sellers to collect and remit the 20% excise tax on products sold directly to Nebraska consumers.
Wordekemper introduced an amendment to the committee amendment to more clearly define which remote retail sales would be subject to the tax collection requirement. It also would ensure that the requirement applies only to “covered tobacco products” — like cigars and pipe tobacco — but not snuff, chewing tobacco or electronic nicotine delivery systems.
The amendment also would require remote retailers of covered tobacco products to apply for a license from the state tax commissioner.
License holders that meet certain sales thresholds would be subject to the tax collection requirement. They also would be required to submit monthly tax returns and keep accurate sales records.
The new requirements would take effect Jan. 1, 2027.
Wordekemper said the modified proposal would ensure consistent application of Nebraska’s tobacco tax policies, modernize state law to account for e-commerce and provide clear rules for remote retailers.
“This new approach levels the playing field for our local businesses without sacrificing state revenue,” he said.
After adopting Wordekemper’s amendment on a vote of 41-0, senators voted 44-0 to advance LB212 to select file.
