New York Proposal to Tax Nicotine Pouches at 75% Draws Opposition

Key Takeaways

• Governor Kathy Hochul included a nicotine pouch tax proposal in her preliminary two-year USD 260 billion budget plan.
• Opponents said the proposal would impose a 75% tax on nicotine pouch products.
• The New York Association of Convenience Stores and the Business Council of New York State have formed a coalition against the measure.
• Critics say New York already faces a large illicit cigarette market driven by high taxes.
• New York’s cigarette excise tax is USD 5.35 per pack, and in New York City an additional USD 1.50 local tax brings the combined rate to USD 6.85 per pack.

 2Firsts, March 17, 2026

According to Patch, a proposal by New York Governor Kathy Hochul to impose a steep tax on nicotine pouches has drawn opposition from law-enforcement officials and business groups, who warn that the move could expand the state’s illicit tobacco market.

Hochul included the proposal in her preliminary two-year USD 260 billion budget plan.

According to her administration, the tax would treat nicotine pouches like other tobacco products and discourage the use of addictive nicotine products.

The New York Association of Convenience Stores and the Business Council of New York State have formed a coalition to fight the measure, arguing that the tax would hurt small retailers and encourage black-market sales.

Opponents said the policy could deepen a problem New York already faces: a large illicit cigarette market fueled by high taxes.

In a letter to legislative leaders, John Garcia urged lawmakers reviewing the governor’s preliminary budget to reject the plan to impose a 75% tax on nicotine pouch products.

Garcia wrote, “New York already faces widespread trafficking of vapes and other regulated goods. Experience shows that steep tax increases rarely reduce demand; they push it underground.”

The original report said Garcia is the top law-enforcement official in Hochul’s home county. He joined retailers and industry groups in opposing the proposal to tax nicotine pouches such as Zyn and FRE at the same rate as cigarettes.

New York charges the highest cigarette excise tax in the nation at USD 5.35 per pack. Nearby Massachusetts charges USD 3.51 per pack, while Vermont charges USD 3.08.

Within New York City, an additional USD 1.50 local tax raises the combined rate to USD 6.85 per pack.

The report also said authorities have seized growing quantities of banned and untaxed vaping products linked to cross-border smuggling operations.

During a 2023 enforcement raid, investigators confiscated more than 1,800 cartons of cigarettes and about USD 155,000 in cash.

Lawmakers will weigh the nicotine pouch tax proposal as they negotiate the final state budget with Hochul’s administration.

Image source: Patch