US Collects $23.0 Billion in Tobacco and Alcohol Sales Tax Revenue, Down 1.5% From Year Ago
Tobacco and alcohol come at a price beyond your health. Unlike a general sales tax, these products face additional taxes in an attempt to discourage consumption.
However, “sin tax” collection has fallen slightly. From 2022 to 2023, tobacco and alcohol sales tax revenue fell slightly in the U.S., dropping from $23.4 billion to $23.0 billion. Here’s what else we found.
Key findings
- The U.S. collected $23.0 billion in tobacco and alcohol sales tax in 2023. That’s down 1.5% from $23.4 billion in 2022.
- Oklahomans pay the most per person in tobacco and alcohol sales tax. In 2023, residents 21 and older paid an average of $193.46 per person in tobacco and alcohol sales tax, ahead of those in New Hampshire ($192.72) and Delaware ($185.72).
- Iowans pay the least per person in tobacco and alcohol sales tax. In 2023, residents 21 and older paid an average of $6.32 in related sales tax, below those in Missouri ($9.66) and Arizona ($11.35).
- Minnesota residents saw the biggest increase in tobacco and alcohol sales tax per person between 2022 and 2023, while District of Columbia residents saw the biggest decrease. In Minnesota, residents paid 421.4% more per person in sales tax in the analyzed period. On the other hand, residents in D.C. paid 38.1% less — the biggest drop by state.
U.S. collects 1.5% less in tobacco and alcohol sales tax in 2023
In 2023, the U.S. collected $23.0 billion in tobacco and alcohol sales tax, down 1.5% from $23.4 billion in 2022. Specifically, tobacco sales tax revenue decreased 3.7% from $16.1 billion to $15.5 billion, while alcohol sales tax revenue increased 3.2% from $7.3 billion to $7.5 billion.
Impact of tax changes
Though tax revenue sees an initial boost, cigarette purchases fall sharply after states increase related taxes, according to the Tax Foundation. And hikes can lead consumers to turn to black-market products as cheaper alternatives — particularly in areas with high tax rates.
Meanwhile, alcohol consumption generally doesn’t change with price or tax fluctuations, though light and moderate drinkers may alter habits more than heavy drinkers as a result. If alcohol sales tax revenue falls, those who drink may just be shifting to cheaper forms of alcohol.
Matt Schulz — LendingTree chief credit analyst and author of “Ask Questions, Save Money, Make More: How to Take Control of Your Financial Life” — says the decline in tobacco sales tax can be attributed to a number of factors.
“The rise of legalized marijuana has played a significant role,” he says. “Marijuana has become the go-to option for many Americans when alcohol and tobacco used to be. That’s likely to continue into the future. Inflation has certainly played a role, too. When the price of everything goes up, budgets get tightened and sacrifices need to be made. For many, less smoking is one of those sacrifices. And many Americans are just interested in living a healthier lifestyle. They’re going to the gym or the trail instead of doing other activities, and that makes a difference.“
Oklahoma residents pay the most per person
As for the states where residents paid the most per person in tobacco and alcohol sales tax in 2023, Oklahoma ranked first. Here, residents 21 and older paid an average of $193.46 per person.
Generally, Oklahoma is on the low end on related tax rates, ranking 27th for distilled spirits sales taxes and 15th for beer taxes, according to Tax Foundation data. Additionally, the state charges $2.03 in tobacco taxes per pack of cigarettes. For context, the highest a state charges is $5.35 (New York), while some states impose minimal taxes (Missouri’s rate is 17 cents per pack). These generally low rates may encourage alcohol and tobacco purchases and contribute to the state’s No. 1 ranking.
The next highest-ranking states are New Hampshire ($192.72) and Delaware ($185.72).
States with the highest average sales taxes paid on tobacco and alcohol
| Rank | State | Average taxes paid per person, 2023 |
|---|---|---|
| 1 | Oklahoma | $193.46 |
| 2 | New Hampshire | $192.72 |
| 3 | Delaware | $185.72 |
Source: LendingTree analysis of U.S. Census Bureau Selected Monthly Sales Tax Collections data.
According to Schulz, these rankings may have major indications for consumers in these states.
“Those higher tax collections are a big deal when you’re living on a budget or paycheck to paycheck,” he says. “That’s especially true in Oklahoma, one of the country’s lowest income states, while New Hampshire and Delaware are on the other end of the spectrum. Those amounts aren’t huge by any stretch, but they’re still money that can’t go toward groceries and utility bills or an emergency fund, savings for college or mortgage down payments or other financial goals. It just makes an already challenging situation worse.”
On the other end of the spectrum, Iowa residents pay the least per person in tobacco and alcohol sales tax, at an average of $6.32 in related sales tax. That’s followed by Missouri ($9.66) and Arizona ($11.35). Iowa and Missouri didn’t have available tobacco sales tax data, likely pushing both to the bottom.
Full rankings
States with the highest/lowest average sales taxes paid on tobacco and alcohol
| Rank | State | Average taxes paid per person, 2023 |
|---|---|---|
| 1 | Oklahoma | $193.46 |
| 2 | New Hampshire | $192.72 |
| 3 | Delaware | $185.72 |
| 4 | Rhode Island | $174.55 |
| 5 | Alaska | $171.18 |
| 6 | Maine | $157.41 |
| 7 | Kentucky | $153.68 |
| 8 | Pennsylvania | $137.60 |
| 9 | Texas | $136.14 |
| 10 | Wisconsin | $135.38 |
| 11 | Connecticut | $127.68 |
| 12 | Hawaii | $126.01 |
| 13 | Montana | $125.05 |
| 14 | Arkansas | $124.43 |
| 15 | Oregon | $120.31 |
| 16 | West Virginia | $118.14 |
| 17 | Minnesota | $116.14 |
| 18 | Maryland | $115.78 |
| 19 | Illinois | $112.43 |
| 20 | Washington | $112.06 |
| 21 | Kansas | $106.08 |
| 22 | Ohio | $103.73 |
| 23 | North Carolina | $101.65 |
| 24 | Tennessee | $100.64 |
| 25 | Michigan | $95.54 |
| 26 | Louisiana | $95.30 |
| 27 | Colorado | $93.23 |
| 28 | Nevada | $91.95 |
| 29 | South Dakota | $91.53 |
| 30 | Massachusetts | $86.48 |
| 31 | New Jersey | $84.45 |
| 32 | Indiana | $84.26 |
| 33 | South Carolina | $82.37 |
| 34 | Virginia | $78.07 |
| 35 | New York | $76.07 |
| 36 | Florida | $72.45 |
| 37 | Mississippi | $71.29 |
| 38 | California | $66.45 |
| 39 | Nebraska | $61.26 |
| 40 | New Mexico | $58.80 |
| 41 | Georgia | $56.61 |
| 42 | North Dakota | $56.38 |
| 43 | Utah | $48.64 |
| 44 | Alabama | $36.60 |
| 45 | Idaho | $35.63 |
| 46 | District of Columbia | $31.01 |
| 47 | Arizona | $11.35 |
| 48 | Missouri | $9.66 |
| 49 | Iowa | $6.32 |
Source: LendingTree analysis of U.S. Census Bureau Selected Monthly Sales Tax Collections data. Notes: Alcohol and tobacco sales tax data for Wyoming and Vermont was unavailable. Alcohol sales tax data for Alabama and Oregon was unavailable. Tobacco sales tax data for Iowa and Missouri was unavailable.
Sales taxes paid jump the most in Minnesota
From 2022 to 2023, Minnesota saw the biggest jump in tobacco and alcohol sales taxes per person 21 and older. Here, residents paid 421.4% more per person in these sales taxes, from $22.27 to $116.14 per person. Notably, cigarette sales taxes in the state increased from 66.3 cents per 20-pack in 2022 to 69.2 cents in 2023.
That’s followed by Oregon, which saw tax collection jump 73.3% from $69.43 per person in 2022 to $120.31 in 2023. Iowa rounds out the top three, increasing 20.1% from $5.27 to $6.32. (As a reminder, Oregon’s calculation doesn’t include alcohol sales tax data, while Iowa’s doesn’t include tobacco sales data.)
States with the biggest percentage increases in sales taxes paid on tobacco and alcohol
| Rank | State | Average taxes paid per person, 2022 | Average taxes paid per person, 2023 | % change |
|---|---|---|---|---|
| 1 | Minnesota | $22.27 | $116.14 | 421.4% |
| 2 | Oregon | $69.43 | $120.31 | 73.3% |
| 3 | Iowa | $5.27 | $6.32 | 20.1% |
Source: LendingTree analysis of U.S. Census Bureau Selected Monthly Sales Tax Collections data. Notes: Alcohol sales tax data for Oregon was unavailable. Tobacco sales tax data for Iowa was unavailable.
Conversely, the tax per person among 21-and-older residents in D.C. fell 38.1% from $50.12 in 2022 to $31.01 in 2023. That’s followed by drops in California (13.6%) and New Hampshire (11.1%).
In total, 14 states saw increases in sales taxes per person, while 35 states saw decreases.
Full rankings
States with the biggest percentage increases/decreases in sales taxes paid on tobacco and alcohol
| Rank | State | Average taxes paid per person, 2022 | Average taxes paid per person, 2023 | % change |
|---|---|---|---|---|
| 1 | Minnesota | $22.27 | $116.14 | 421.4% |
| 2 | Oregon | $69.43 | $120.31 | 73.3% |
| 3 | Iowa | $5.27 | $6.32 | 20.1% |
| 4 | Delaware | $165.78 | $185.72 | 12.0% |
| 5 | Maryland | $106.75 | $115.78 | 8.5% |
| 6 | North Carolina | $96.65 | $101.65 | 5.2% |
| 7 | Alaska | $163.40 | $171.18 | 4.8% |
| 8 | Nebraska | $58.66 | $61.26 | 4.4% |
| 8 | Missouri | $9.25 | $9.66 | 4.4% |
| 10 | Virginia | $74.82 | $78.07 | 4.3% |
| 11 | South Dakota | $88.94 | $91.53 | 2.9% |
| 12 | Texas | $133.83 | $136.14 | 1.7% |
| 13 | Tennessee | $99.32 | $100.64 | 1.3% |
| 14 | Arizona | $11.25 | $11.35 | 0.9% |
| 15 | Maine | $157.59 | $157.41 | -0.1% |
| 16 | Arkansas | $125.46 | $124.43 | -0.8% |
| 17 | Utah | $49.34 | $48.64 | -1.4% |
| 18 | Georgia | $57.52 | $56.61 | -1.6% |
| 19 | North Dakota | $57.55 | $56.38 | -2.0% |
| 20 | Indiana | $86.65 | $84.26 | -2.8% |
| 21 | Colorado | $96.61 | $93.23 | -3.5% |
| 22 | Washington | $116.36 | $112.06 | -3.7% |
| 23 | New Mexico | $61.26 | $58.80 | -4.0% |
| 24 | South Carolina | $85.96 | $82.37 | -4.2% |
| 25 | Wisconsin | $142.09 | $135.38 | -4.7% |
| 25 | Pennsylvania | $144.46 | $137.60 | -4.7% |
| 25 | Oklahoma | $203.11 | $193.46 | -4.7% |
| 28 | Kansas | $111.42 | $106.08 | -4.8% |
| 29 | Florida | $76.15 | $72.45 | -4.9% |
| 30 | Mississippi | $75.28 | $71.29 | -5.3% |
| 31 | Massachusetts | $91.40 | $86.48 | -5.4% |
| 32 | New Jersey | $89.38 | $84.45 | -5.5% |
| 33 | Illinois | $119.14 | $112.43 | -5.6% |
| 34 | Kentucky | $163.00 | $153.68 | -5.7% |
| 34 | Louisiana | $101.10 | $95.30 | -5.7% |
| 36 | New York | $80.90 | $76.07 | -6.0% |
| 37 | Hawaii | $134.61 | $126.01 | -6.4% |
| 37 | West Virginia | $126.27 | $118.14 | -6.4% |
| 39 | Ohio | $111.03 | $103.73 | -6.6% |
| 40 | Nevada | $98.87 | $91.95 | -7.0% |
| 41 | Montana | $134.76 | $125.05 | -7.2% |
| 42 | Connecticut | $138.47 | $127.68 | -7.8% |
| 43 | Michigan | $103.81 | $95.54 | -8.0% |
| 44 | Idaho | $38.76 | $35.63 | -8.1% |
| 45 | Rhode Island | $190.71 | $174.55 | -8.5% |
| 46 | Alabama | $41.01 | $36.60 | -10.7% |
| 47 | New Hampshire | $216.90 | $192.72 | -11.1% |
| 48 | California | $76.87 | $66.45 | -13.6% |
| 49 | District of Columbia | $50.12 | $31.01 | -38.1% |
Source: LendingTree analysis of U.S. Census Bureau Selected Monthly Sales Tax Collections data. Notes: Alcohol and tobacco sales tax data for Wyoming and Vermont was unavailable. Alcohol sales tax data for Alabama and Oregon was unavailable in 2022 and 2023 and for Michigan in 2022. Tobacco sales tax data for Iowa and Missouri was unavailable.
Paying the price for your vice: Top expert tips on budgeting
When it comes to your financial health, everything must be done in moderation — especially vices like tobacco and alcohol. With prices potentially on the rise next year, here are a few tips to make room for those vices:
- Budget for it. “If you know you spend a lot of money on alcohol and/or tobacco, make sure it has a place in your budget,” Schulz says. “That’s true whether you’re a connoisseur of fine wines and cigars or you’re not that particular. It may seem a little weird to budget for that sort of thing, but if it’s a passion of yours and you spend a lot of money on it, you should budget for it the same way others budget for travel, collecting or any other hobby. What you leave out of your budget can come back to bite you in a big hurry.”
- Seek out healthier hobbies. “There’s virtually nothing more important to your financial situation than your physical and mental health,” he says. “Drinking and smoking can take a toll on both of those, leading to higher medical costs and insurance premiums and more financial issues. Life is expensive enough in 2024 and probably won’t change much in 2025, so make it easier on yourself by taking better care of yourself. For example, instead of spending the night drinking and smoking with friends, stay in and head out the next morning for a great hike in your area.”
- Seek out lower-cost options. “Can you really tell the difference between that $8 bottle of wine and the one that runs you $25?” he asks. “What about between that imported pilsner and an American-brewed one? If you can’t, keep that extra cash in your pocket and opt for the lower price.”
- Consolidate your debts. A low-interest personal loan can knock down the payments on your current debts, freeing up extra money to put toward that holiday get-together or football-watching party.
Methodology
LendingTree researchers analyzed U.S. Census Bureau Selected Monthly Sales Tax Collections data to rank the states that pay the most and least per person in tobacco and alcohol sales tax.
Specifically, we summed the total sales tax collected on tobacco and alcohol in 2022 and 2023 and divided those numbers by the 21-and-older population. We ranked the states from highest to lowest based on the average tax collected in 2023 per 21-and-older resident. We also calculated the change between 2022 and 2023.
Alcohol and tobacco sales tax data for Wyoming and Vermont was unavailable. Alcohol sales tax data for Alabama and Oregon was unavailable in 2022 and 2023 and for Michigan in 2022. Tobacco sales tax data for Iowa and Missouri was unavailable.