Alternative Nicotine Products Subject to Tobacco Products Tax and Floor Tax Due

Effective September 1, 2026, the New York State tobacco products tax is extended to alternative nicotine products. The tax is imposed at the rate of 75% of the wholesale price of the product. Distributors generally pay the tobacco products tax. However, because the tax has not been paid on alternative nicotine products held in the inventories of distributors, wholesale dealers, and retail dealers, all sellers of these products must file a floor tax return and pay tax on the inventory in their possession as of 11:59 p.m. Eastern Standard Time on August 31, 2026, by September 21, 2026. See below for more details.

Definitions

Alternative nicotine products are noncombustible products, other than vapor products, which contain nicotine but not tobacco and are intended for human consumption, whether chewed, absorbed, dissolved, or ingested by any other means. Alternative nicotine products do not include any product regulated as a drug or device by the U.S. Food and Drug Administration (FDA) under 21 U.S.C. § 351 et seq. For example, certain smoking cessation drugs and devices regulated by the FDA are not considered alternative nicotine products.

A distributor is any person who imports or causes to be imported into this state any tobacco product (in excess of fifty cigars, one pound of tobacco, or fifteen units of alternative nicotine products) for sale, or who manufactures any tobacco product in this state, and any person within or outside the state who is authorized by the commissioner of taxation and finance to file returns and pay the tax on tobacco products sold, shipped or delivered by them to any person in the state.

Unit means any canister, pack, box, carton, or container of any kind or, if there is no other container, any wrapping, in which an alternative nicotine product is offered for sale, sold, or otherwise distributed to consumers.

Wholesale price means the price for which the tobacco products are sold to a distributor, before the allowance of any discount, trade allowance, rebate or other reduction, and including the federal excise taxes paid by the seller. The invoice received by a distributor for its purchase of a tobacco product is presumptive evidence of the wholesale price of the tobacco product. For purposes of the floor tax only, retail dealers may use 50% of their selling price (excluding sales tax) as the wholesale price.

Registration requirements

Any person who imports or sells alternative nicotine products in New York State must be licensed or registered as a tobacco products distributor, wholesale dealer, or retail dealer before September 1, 2026.

Distributors, wholesale dealers, and retail dealers that have an existing license or registration with the Tax Department to sell tobacco products do not need to register again to sell alternative nicotine products.

For forms and instructions, see Tobacco products on our webpage Cigarette and tobacco products tax: Start a business

Floor tax return due September 21, 2026

Tobacco products distributors, wholesale dealers, and retail dealers must:

take a physical inventory of all alternative nicotine product units in their possession as of 11:59 p.m. Eastern Standard Time on August 31, 2026, and
file Form MT-200.5, Alternative Nicotine Products Floor Tax Return, and pay the floor tax of 75% of the wholesale price of these units by September 21, 2026.

The floor tax return requirement includes alternative nicotine products sold in vending machines.

Vending machine operators must complete a physical inventory of as many machines as possible by 11:59 p.m. Eastern Standard Time on August 31, 2026. For each machine where this is not possible, the operator must estimate the inventory at one-half of the machine’s normal fill capacity based on its individual inventory records. The inventory in each vending machine or warehouse must be reported on Form MT-200.5, Schedule B.

Distributors and dealers who store or sell units of alternative nicotine products at more than one location must file one consolidated alternative nicotine products floor tax return reporting the inventory for each location on Form MT-200.5, Schedule A.

Distributors and dealers who store or sell units of alternative nicotine products must:

keep the original inventory reports at each separate business location for inspection,
keep all physical inventory records used to arrive at the amount of alternative nicotine products floor tax due, and
make their records available to the Tax Department upon request.

The Tax Department will impose interest and civil and criminal penalties on any distributor or dealer that is required to but does not file Form MT-200.5 or pay the appropriate tax due by September 21, 2026.

For more information about alternative nicotine products, see Cigarette and tobacco products tax.

Note: An N-Notice is generally issued to announce a singular event, such as an update to a previously issued tax form or instruction, or to announce a new due date for filing returns and making payments of tax because of a natural disaster. The Tax Department does not revise previously issued N-Notices.

Updated: July 9, 2026