Many vapers across Alabama will face higher prices as early as Wednesday as a patchwork of local taxes begin to take effect. Local municipalities have rushed to pass vape taxes before a state law takes effect that prevents them from passing new taxes on vaping products after Oct. 1.
The Alabama State Legislature passed a bill in early May that will impose a $0.10 per milliliter wholesale tax on e-liquid (with and without nicotine) beginning in October 2026. That law also specifically prohibits local governments from passing their own e-liquid taxes after Oct. 1, 2025.
“Notwithstanding any other provision of this act, an act of the Legislature or an ordinance or resolution by a taxing authority passed or enacted on or before October 1, 2025, imposing or providing for the levy of a local tax or license fee shall remain operative; however, no additional local tax or license fee may be levied on the sale of consumable vapor products after the effective date of this act,” says HB 529.
Since local officials became aware of the time limit, cities and towns across the state have been in a race to pass their own taxes before the cutoff date.
A portion of the state tax, when it takes effect, will go to counties (25 percent) and municipalities (25 percent) based on their population. But many city leaders have decided that their share of that pie may be much smaller than what they could generate by imposing their own taxes.
Cities and counties that assess their own tax will not receive any of the state tax revenue, but small business owners will have to pay both taxes and deal with the taxing authorities. And the new excise costs will be added to the prices consumers pay.
As with any local tax, many consumers will avoid it by traveling to businesses in nearby jurisdictions without a tax, or by buying online. In either case, local businesses will suffer.
Some cities have passed their own $0.10/mL tax. Others have opted for lower tax rates. But no matter the rate, the statewide tax will add another $0.10/mL to prices next year, which will hurt both consumers and local retailers.
Although we don’t have a comprehensive list, some of the cities that have already adopted new local taxes are Chelsea, Decatur, Dothan, Fairhope, Foley, Gulf Shores, Muscle Shoals, Orange Beach, and Spanish Fort. The city council in Mobile---the second-largest city in Alabama---will debate a proposed tax ordinance today, according to NBC 15 News.
Six U.S. states, including Alabama, have passed laws to create or increase vape taxes so far this year.