{"data":{"id":"us-ky/krs-138.140","jurisdiction":"us-ky","citation":"KRS 138.140","heading":"Taxation of cigarettes, tobacco products, and vapor products -- Taxes not","body":"applicable to reference tobacco products -- Rates -- Liability for and\nremittance of tax -- Administrative regulations -- General Assembly's\nrecognition of effect of increa sed tobacco taxes on public health -- Potential\nreduction of tax on modified risk tobacco product.\n(1) (a) A tax shall be paid on the sale of cigarettes within the state at a proportionate\nrate of three cents ($0.03) on each twenty (20) cigarettes.\n(b) Effective July 1, 2018, a surtax shall be paid in addition to the tax levied in\nparagraph (a) of this subsection at a proportionate rate of one dollar and six\ncents ($1.06) on each twenty (20) cigarettes.\n(c) A surtax shall be paid in addition to the tax levied in paragraph (a) of this\nsubsection and in addition to the surtax levied by paragraph (b) of this\nsubsection, at a proportionate rate of one cent ($0.01) on each twenty (20)\ncigarettes. The revenues from this surtax shall be deposited in the  cancer\nresearch institutions matching fund created in KRS 164.043.\n(d) The surtaxes imposed by paragraphs (b) and (c) of this subsection shall be\npaid at the time that the tax imposed by paragraph (a) of this subsection is\npaid.\n(2) (a) An excise tax is h ereby imposed upon every distributor for the privilege of\nselling tobacco products in this state at the following rates:\n1. Upon snuff at the rate of nineteen cents ($0.19) per each one and one -\nhalf (1-1/2) ounces or portion thereof by net weight sold;\n2. Upon chewing tobacco at the rate of:\na. Nineteen cents ($0.19) per each single unit sold;\nb. Forty cents ($0.40) per each half-pound unit sold; or\nc. Sixty-five cents ($0.65) per each pound unit sold.\nIf the container, pouch, or package on which the tax is levied contains\nmore than sixteen (16) ounces by net weight, the rate that shall be\napplied to the unit shall equal the sum of sixty -five cents ($0.65) plus\nnineteen cents ($0.19) for each increment o f four (4) ounces or portion\nthereof exceeding sixteen (16) ounces sold;\n3. Beginning July 1, 2026, upon premium cigars sold, at the rate of six\npercent (6%) of the actual price for which the distributor sells premium\ncigars;\n4. a. Prior to July 1, 2026, u pon tobacco products sold, at the rate of\nfifteen percent (15%) of the actual price for which the distributor\nsells tobacco products, except snuff and chewing tobacco, within\nthe Commonwealth; and\nb. On or after July 1, 2026, upon tobacco products sold, at  the rate of\nfifteen percent (15%) of the actual price for which the distributor\nsells tobacco products, except snuff, chewing tobacco, and\npremium cigars, within the Commonwealth;\n5. Upon closed vapor cartridges, one dollar and fifty cents ($1.50) per\ncartridge; and\n6. Upon open vaping systems, fifteen percent (15%) of the actual price for\nwhich the distributor sells:\na. The open vaping system when the actual price includes the items\ndescribed in both KRS 138.130(10)(a)1. and 2.; or\nb. The liquid solution  described in KRS 138.130(10)(a)2. when the\nsolution is sold separately.\n(b) The net weight posted by the manufacturer on the container, pouch, or\npackage or on the manufacturer's invoice shall be used to calculate the tax due\non snuff or chewing tobacco.\n(c) 1. A retailer located in this state shall not purchase tobacco products for\nresale to consumers from any person within or outside this state unless\nthat person is a distributor licensed under KRS 138.195(7)(a) or the\nretailer applies for and is granted a retail distributor's license under KRS\n138.195(7)(b) for the privilege of purchasing untax -paid tobacco\nproducts and remitting the tax as provided in this paragraph.\n2. A licensed retail distributor of tobacco products shall be subject to the\nexcise tax as follows:\na. On purchases of untax -paid snuff, at the same rate levied by\nparagraph (a)1. of this subsection;\nb. On purchases of untax -paid chewing tobacco, at the same rates\nlevied by paragraph (a)2. of this subsection;\nc. On purchases of untax -paid pr emium cigars, at the same rate\nlevied by paragraph (a)3. of this subsection;\nd. On purchases of untax -paid tobacco products, except snuff,\npremium cigars, and chewing tobacco, fifteen percent (15%) of the\ntotal purchase price as invoiced by the retail distributor's supplier;\ne. On purchases of untax -paid closed vapor cartridges, at the same\nrate levied by paragraph (a)5. of this subsection; and\nf. On purchases of untax -paid open vaping systems, fifteen percent\n(15%) of the total purchase price as invoiced b y the retail\ndistributor's supplier as described in paragraph (a)6. of this\nsubsection.\n(d) 1. The licensed distributor that first possesses tobacco products or vapor\nproducts for sale to a retailer in this state or for sale to a person who is\nnot licensed under KRS 138.195(7) shall be the distributor liable for the\ntax imposed by this subsection except as provided in subparagraph 2. of\nthis paragraph.\n2. A distributor licensed under KRS 138.195(7)(a) may sell tobacco\nproducts or vapor products to another d istributor licensed under KRS\n138.195(7)(a) without payment of the excise tax. In such case, the\npurchasing licensed distributor shall be the distributor liable for the tax.\n3. A licensed distributor or licensed retail distributor shall:\na. Identify and di splay the distributor's or retail distributor's license\nnumber on the invoice to the retailer; and\nb. Identify and display the excise tax separately on the invoice to the\nretailer. If the excise tax is included as part of the product's sales\nprice, the licensed distributor or licensed retail distributor shall list\nthe total excise tax in summary form by tax type with invoice\ntotals.\n4. It shall be presumed that the excise tax has not been paid if the licensed\ndistributor or licensed retail distributor does not comply with\nsubparagraph 3. of this paragraph.\n(e) A tax shall not be imposed on tobacco products or vapor products under this\nsubsection that are outside the taxing power of this state under the Commerce\nClause of the United States Constitution.\n(3) (a) The taxes imposed by subsections (1) and (2) of this section:\n1. Shall not apply to reference products; and\n2. Shall be paid only once, regardless of the number of times the cigarettes\nor tobacco products may be sold.\n(b) The taxes imposed by subsection (1)(a) and (b) and subsection (2) of this\nsection shall be reduced by:\n1. Fifty percent (50%) on any product as to which a modified risk tobacco\nproduct order is issued under 21 U.S.C. sec. 387k(g)(1); or\n2. Twenty-five percent (25%) for any product as to which a modified risk\ntobacco product order is issued under 21 U.S.C. sec. 387k(g)(2).\n(4) A reference product shall carry a marking  labeling the contents as a research\ncigarette, research vapor product, or a research tobacco product to be used only for\ntobacco-health research and experimental purposes and shall not be offered for sale,\nsold, or distributed to consumers.\n(5) The department may prescribe forms and promulgate administrative regulations to\nexecute and administer the provisions of this section.\n(6) The General Assembly recognizes that increasing taxes on tobacco products should\nreduce consumption, and therefore result in healthier lifestyles for Kentuckians. The\nrelative taxes on tobacco products proposed in this section reflect the growing data\nfrom scientific studies suggesting that although smokeless tobacco poses some\nrisks, those health risks are significantly less than  the risks posed by other forms of\ntobacco products. Moreover, the General Assembly acknowledges that some in the\npublic health community recognize that tobacco harm reduction should be a\ncomplementary public health strategy regarding tobacco products. Tax ing tobacco\nproducts according to relative risk is a rational tax policy and may well serve the\npublic health goal of reducing smoking -related mortality and morbidity and\nlowering health care costs associated with tobacco-related disease.\n(7) Any person su bject to the taxes imposed under subsections (1) and (2) of this\nsection that:\n(a) Files an application related to a modified risk tobacco product shall report to\nthe department that an application has been filed within thirty (30) days of\nthat filing; and\n(b) Receives an order authorizing the marketing of a modified risk tobacco\nproduct shall report to the department that an authorizing order has been\nreceived.\n(8) Upon receipt of the information required by subsection (7)(b) of this section, the\ndepartment shall reduce the tax imposed on the modified risk tobacco product as\nrequired by subsection (3)(b) of this section on the first day of the calendar month\nfollowing the expiration of forty-five (45) days following receipt of the information\nrequired by subsection (7)(b) of this section.","path":["KRS Chapter 138"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=57929","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:29Z","sha256":"e6ba8e78e5aba777a153ef04674af226ac22ac4648e86a84ed112406ec6e24db","source_id":"us-ky","stale":false,"prev":"us-ky/krs-138.135","next":"us-ky/krs-138.143"},"notice":"GroundRules: Original legal text. Not legal advice."}