Senate Passes Cigar Tax Increase

An increase in tobacco taxes to fund an expansion of the State Children's Health Insurance Program was passed yesterday in the the U.S. Senate (S.275). The U.S. House had previously passed its own version earlier this month (H.R.2). In short, the cap on the federal excise tax on cigars is expected to increase by just over 35 cents per cigar on April 1, 2009. Currently, the House version has a cap of 40 cents per cigar, while the Senate's version has a cap of 40.26 cents per cigar. The existing cap is 4.875 cents per cigar. After the House and Senate reconcile their differences sometime during early February, Congress will then send the legislation to the President, who is more than anxious to sign it into law.