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Prepaid sales tax on cigarettes

Cigarette tax agents must prepay the sales tax on cigarettes possessed for sale or use in New York. The prepaid sales tax the agent pays must be passed through to each successive purchaser until the cigarettes are sold at retail to a customer. When cigarettes are sold at retail, the seller collects the combined rate of state and local sales tax from the customer. The seller then takes a credit for any prepaid tax that it previously paid when filing its sales tax return.

The prepaid sales tax rate on cigarettes increased for the period September 1, 2023, through August 31, 2024.

Prepaid sales tax rate increases
Pack size Rate increase New prepaid sales tax rate
20 cigarettes $0.05 $1.02
25 cigarettes $0.07 $1.28