Michigan Proposes 57% Vape Tax in $800M Revenue Plan

Regulations
Feb.23
Michigan Proposes 57% Vape Tax in $800M Revenue Plan
Michigan Governor Gretchen Whitmer’s FY2027 executive budget proposes a new 57% wholesale tax on vaping products and oral nicotine items as part of a broader $800 million revenue package aimed at stabilizing Medicaid funding.

Key Points

 

  • Michigan proposes a 57% wholesale tax on vape and oral nicotine products.

 

  • The nicotine tax is expected to raise about $95 million annually.

 

  • Cigarette taxes would increase from $2 to $3 per pack.

 

  • The broader revenue package aims to generate nearly $800 million.

 

  • Funds are primarily intended to stabilize Medicaid coverage.

 


 

2Firsts, February 23, 2026

 

The following is compiled from budget documents released by the Office of Governor Gretchen Whitmer and coverage by Michigan Advance and Bridge Michigan. Michigan Governor Gretchen Whitmer has proposed significant tax increases on vaping and nicotine products as part of her FY2027 executive budget plan.

 

The $88.1 billion budget includes a revenue package projected to raise nearly $800 million annually. A central element is a proposed 57% wholesale tax on vaping products and oral nicotine items, including products such as Zyn. The administration estimates the measure would generate approximately $95 million per year.

 

In addition, the proposal would raise the cigarette wholesale tax from $2 to $3 per pack, generating an estimated $232 million annually. Together, tobacco-related measures would contribute more than $300 million toward the broader revenue target.

 

The nicotine tax changes are designed to help stabilize Michigan’s Medicaid program, which insures more than 2.6 million residents — roughly one-quarter of the state’s population. State officials warn that federal funding changes have created financial pressure on the program.

 

Other revenue measures in the proposal include a new 4.7% tax on digital advertisements served in Michigan, higher tax rates on large online casino operators, a per-wager sports betting tax, and the elimination of deductions for promotional sports bets.

 

Governor Whitmer’s administration has framed the targeted tax approach as a way to fund education and healthcare priorities without increasing broad-based income or sales taxes.

 

However, the proposal faces political hurdles. Michigan’s Republican-controlled House has already indicated opposition to tax increases, setting up negotiations that will determine whether the nicotine tax proposal advances.

 

(Cover Image Governor Gretchen Whitmer | Image Sources: Office of Governor Gretchen Whitmer)


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Nicotine-containing products, including but not limited to cigarettes, e-cigarettes, heated tobacco products, and nicotine pouches, carry significant health risks. Readers are responsible for complying with all applicable laws and regulations in their respective jurisdictions, including age restrictions and access limitations.

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This article is not intended for individuals below the legal age for accessing tobacco or nicotine-related information in their jurisdiction.

 

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