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What Is the Cigarette Tax Used For?

In the United States, the federal cigarette tax is $1.01 as of November 2009. It is used to fund a specific children's health program. In addition to federal taxes, states and local municipalities tax cigarettes.

  1. United States Federal Cigarette Tax

    • The federal cigarette tax in the United States funds the State Children's Health Insurance Program (S-CHIP).

    S-CHIP

    • S-CHIP was created as part of the Balanced Budget Act of 1997. It introduced a 39-cent tax on a pack of cigarettes to fund the program. S-CHIP provides insurance to children whose parents do not qualify for Medicaid.

    United States Federal Tax Increase

    • In April 2009, the federal government raised the tax on cigarette's by 62 cents a pack to raise more funds for S-CHIP. The fund will help insure up to 4 million children whose parents earn too much to qualify for Medicaid.

    Variance in State Taxes

    • The average state tax on a pack of cigarettes is $1.34. Rhode Island has the largest tax, $3.46 a pack, while and Carolina has the lowest, 7 cents a pack. The largest state, California, has a tax of 87 cents a pack.

    California State Tax

    • According to the California Board of Equalization, 10 cents of the revenue goes to the state's general fund. Two cents goes to the Breast Cancer Research Fund. Fifty cents goes towards programs to help children develop. The other 25 cents is used for various purposes, including environmental protection and tobacco-related education programs.

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