Federal Excise Tax

The tax paid to the U.S. government on cigars as they are brought into the United States. This tax is paid by the importer, and is typically passed onto the consumer. The Federal Excise tax on large cigars used to be modest, less than five cents per cigar, until April 2009 when the $32.8 billion expansion of the State Children’s Health Care Initiative (SCHIP) caused the federal excise tax to balloon to 40.26 cents per cigar. Some companies didn’t increase prices, but most did.