South Carolina taxes vapes, cuts heated tobacco tax

June 5, 2026

1–2 minutes

Summary

A South Carolina law will tax vapes starting Oct. 1, while lowering taxes on heated tobacco products not yet sold in the state.

Why this matters

The law changes how South Carolina taxes nicotine products and is expected to send new revenue to Medicaid as cigarette tax collections fall. Consumers, retailers, and health providers may all be affected when the tax changes take effect Oct. 1.

A South Carolina law taking effect Oct. 1 will tax vapes and direct the revenue to Medicaid, as cigarette tax collections decline with fewer people smoking.

The law, signed by Gov. Henry McMaster two weeks ago, also cuts in half the tax on electronic cigarettes that use tobacco rather than liquid nicotine. The change prepares for sales of heated tobacco products that are not currently sold in South Carolina stores.

Starting Oct. 1, vapes will be taxed at 5 cents per milliliter, similar to rates in North Carolina and Georgia.

South Carolina’s cigarette tax remains 57 cents per pack of 20, unchanged since a 2010 law raised it by 50 cents and directed most of the revenue to the state’s share of Medicaid. The higher tax was followed by fewer South Carolinians smoking, but cigarette tax revenue also fell.

The state Medicaid agency expects $77 million in cigarette tax revenue for the fiscal year ending June 30, down from nearly $109 million five years ago. The state pays about 30% of Medicaid costs, with the federal government covering the rest. Rising health care costs will require about $100 million more in state tax revenue in 2026-27 to maintain current services and payments to doctors.

Under the 2010 law, cigarette tax revenue also provides $5 million a year for smoking cessation programs and $5 million a year for cancer research at the Medical University of South Carolina.

Lawmakers cut the tax on heated tobacco products on the assumption they cause fewer health problems than cigarettes. The U.S. Food and Drug Administration allows Philip Morris to market its IQOS device as a modified-risk tobacco product, meaning the company can say smokers who switch completely may reduce exposure to harmful chemicals, according to the Centers for Disease Control and Prevention. The FDA does not allow the company to claim the devices reduce the risk of tobacco-related disease.

Philip Morris briefly sold heated tobacco products in Charleston and Myrtle Beach in 2021 before a patent infringement lawsuit halted sales. The company now sells them in Florida, Texas, and Mississippi, according to its website.

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