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Tobacco Products Tax

Legal References

Electronic Services

Illinois Licensed Tobacco Products Distributors

Definition

The tobacco products tax is imposed upon the last distributor who sells tobacco products to a retailer or consumer located in Illinois.

A distributor of tobacco products, including electronic cigarettes containing any substance such as hemp, is any of the following:

  • any manufacturers or wholesalers in Illinois in the business of selling, exchanging, or distributing tobacco products to retailers or consumers in Illinois;
  • out-of-State manufacturers or wholesalers in the business of selling, distributing, shipping, or transporting tobacco products to retailers or consumers in Illinois, as long as they maintain a place of business in Illinois; or
  • any retailer who receives tobacco products from an entity not registered as a Tobacco Products Distributor in Illinois on which the tax has not been paid. 

The three main categories of tobacco products are:

  • Moist snuff
  • Electronic cigarettes
  • Other tobacco products (OTP)

Exceptions for the tobacco products tax are listed below.

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Moist snuff means any finely cut, ground, or powdered tobacco that is not intended to be smoked, including but not limited to tobacco products referred to as "snus"; plug and twist tobacco; fine-cut and other chewing tobaccos; and other kinds and forms of tobacco, prepared in such manner as to be suitable for chewing, absorption, or ingesting by any other means.

Moist snuff does not include any finely cut, ground, or powdered tobacco that is intended to be placed in the nasal cavity.

"Electronic cigarette", or "E-cigarette", is defined as:

  • Any device that employs a battery or other mechanism to heat a solution or substance to produce a vapor or aerosol intended for inhalation; or
  • Any cartridge or container of a solution or substance intended to be used with or in the device or to refill the device; or
  • Any solution or substance, whether or not it contains nicotine, intended for use in the device

Electronic cigarette includes, but is not limited to, any electronic nicotine delivery system, electronic cigar, electronic cigarillo, electronic pipe, electronic hookah, vape pen, or similar product or device, and any component or part that can be used to build the product or device. Electronic cigarettes containing hemp or any other substance, whether or not it has nicotine, is subject to the Tobacco Products Tax.

“Electronic cigarette” does not include:

  • Any device designed solely for use with cannabis that contains a statement on the retail packaging that the device is designed solely for use with cannabis and not for use with tobacco; or
  • Any device that contains a solution or substance that contains cannabis subject to tax under the Compassionate Use of Medical Cannabis Program Act or the Cannabis Regulation and Tax Act; or
  • Any cartridge or container of a solution or substance that contains cannabis subject to tax under the Compassionate Use of Medical Cannabis Program Act or the Cannabis Regulation and Tax Act; or
  • Any solution or substance that contains cannabis subject to tax under the Compassionate Use of Medical Cannabis Program Act or the Cannabis Regulation and Tax Act.

Other Tobacco Products (OTP) means any product that is made from or derived from tobacco that is intended for human consumption or is likely to be consumed, including but not limited to cigars, including little cigars; cheroots; stogies; periques; granulated, plug cut, crimp cut, ready rubbed, and other smoking tobacco; dry snuff and snuff flour; cavendish; shorts; refuse scraps, clippings, cuttings, and sweeping of tobacco; shisha and tobacco for use in waterpipes; and other kinds and forms of tobacco, prepared in such manner as to be suitable for smoking in a pipe or otherwise.

Beginning July 1, 2025, OTP also include any product that is made from or derived from tobacco, or that contains nicotine whether natural or synthetic, that is intended for human consumption or is likely to be consumed, including but not limited to nicotine pouches, lozenges, and gum; and other kinds and forms of nicotine prepared in such manner as to be suitable for chewing or smoking in a pipe or otherwise, or both for chewing and smoking or for inhalation, absorption, or ingesting by any other means.

For reporting purposes, OTP are any products that meet the definition of “Tobacco Products” excluding products that meet the definition of “Electronic cigarette” or “Moist Snuff”.

  • Tobacco products do not include: 
    • cigarettes as defined in Section 1 of the Cigarette Tax Act;  
    • tobacco purchased for the manufacture of cigarettes by cigarette distributors and manufacturers defined in the Cigarette Tax Act and persons who make, manufacture, or fabricate cigarettes as a part of a Correctional Industries program for sale to residents incarcerated in penal institutions or resident patients of a State operated mental health facility;
    • beginning July 1, 2025, any product that has been approved by the United States Food and Drug Administration for sale as a tobacco or smoking cessation product, a nicotine replacement therapy product, or for other medical purposes where that product is marketed and sold solely for such approved use, including but not limited to spray or inhaler prescribed by a physician, chewing gum, skin patches, or lozenges; or
    • products subject to tax under the Compassionate Use of Medical Cannabis Program Act or the Cannabis Regulation and Tax Act.
  • Little Cigars are classified as cigarettes for tax purposes. For help determining which return to file for little cigars, see the cigarette tax and cigarette use tax forms webpage. Little cigar means and includes any roll, made wholly or in part of tobacco, where such roll has an integrated cellulose acetate filter and weighs less than 4 pounds per thousand and the wrapper or cover of which is made in whole or in part of tobacco.

Tax Rate

Use the Tax Rate Database to determine the rate.

Form Filing & Payment Requirements

Beginning with the January 2025 return, due February 18, 2025, the Illinois Department of Revenue (IDOR) has implemented electronic filing changes. For details, see our webpage about Tobacco Uniformity. 

You can use MyTax Illinois to file these forms, or you can also file using a direct file service through an outside vendor. Form TP-1, Tobacco Products Tax Return, and Form TP-1-IL, Uniform Tobacco Transaction Schedule, are due by the 15th day of the month following the month in which the tobacco products were sold or otherwise disposed.

Note: A taxpayer that had an annual liability of $20,000 or more in the preceding calendar year must remit any tax payment using an electronic payment method, such as submitting payments using MyTax Illinois or submitting payments by Electronic Funds Transfer. 

Allowable Deductions and Nontaxable Sales

The following types of tobacco products sales are not subject to this tax:

  • Sales out-of-state
  • Sales of tobacco used in the cigarette manufacturing process
  • Sales to manufacturers of tobacco products as part of a Correctional Industries program for sale to residents incarcerated in penal institutions and to resident patients of state-operated mental health facilities
  • Sales made to a US government agency

Additional Registration and Bonding Requirements

In addition to filing Form REG-1, Illinois Business Registration Application, distributors must file a bond equal to three times the company's average monthly tobacco tax liability or $50,000, whichever is less. The bond is not required if the taxpayer is a licensed cigarette distributor. You may also register using MyTax Illinois.

Distributors selling both cigarettes and little cigars are considered “stamping distributors” and must be licensed under the Cigarette Tax Act or the Cigarette Use Tax Act  and the Tobacco Products Tax Act.

Retailers of cigarettes and tobacco products as defined in the Cigarette Tax Act, the Cigarette Use Tax Act, or the Tobacco Products Tax Act must also obtain a Cigarette and Tobacco Products Retailer License. This License allows retailers to sell electronic cigarettes. Retailers must pay an annual license fee per retail location. This fee must be submitted electronically with your initial license application. The annual renewal fee also must be submitted electronically using MyTax Illinois.

Resources

Questions?

  • Email us at: REV.ATP-MFR@illinois.gov 
  • Call us weekdays from 8:00 a.m. to 4:00 p.m. at: 217-782-6045
  • Write us at:
    ALCOHOL, TOBACCO AND FUEL DIVISION
    ILLINOIS DEPARTMENT OF REVENUE
    PO BOX 19467
    SPRINGFIELD IL 62794-9467