State cigarette tax revenue soared last month as smokers were hit with a $2 per pack increase in Indiana's cigarette tax, and cigar, pipe and vape users also were made to pay more for their indulgences.
Data released Friday by the State Budget Agency show Indiana collected $40.2 million in cigarette taxes in July — a 112.7% increase compared to the state's $18.9 million in cigarette tax revenue during July 2024.
The Republican-controlled General Assembly and Republican Gov. Mike Braun agreed in April to hike Indiana's cigarette tax to $3 per pack, from $1 per pack, amid growing Medicaid health expenses and a dismal, tariff-impacted state revenue forecast.
Altogether, the 200% per pack cigarette tax increase is projected to raise $850 million in additional revenue over the next two years from the approximately 20% of Hoosier adults who smoke.
The July cigarette tax haul already exceeded the expectations of state budget officials who anticipated cigarette tax receipts would come in $600,000, or 1.4%, lower than last month's actual collections, according to the State Budget Agency.
The additional revenue helped Indiana beat its total July revenue target by $50.2 million, or 3.2%, despite collections from personal and corporate income taxes coming in short of their monthly goals.
The budget agency said those shortfalls likely were due to tax payment timing issues and advised that income tax receipts are best evaluated on a quarterly or annual basis, rather than monthly.
The $933.5 million generated by the 7% state sales tax, Indiana's largest revenue source, was $19.4 million, or 2.1%, more than predicted for July, and $54.5 million, or 6.2%, greater than July 2024 sales tax collections, data show.
© Copyright 2025, nwitimes.com, Munster, IN