How Are Vape Companies Handling Excise Taxes?

The vape industry is trending in the same direction when it comes to excise taxes. This article explains what the trend is and how you can keep up!

At the start of 2022, 30 states had active excise tax rules on vape products in place. Some additional states have enacted excise taxes to start later in 2022. Some states with active excise taxes in place have enacted expansions on their existing excise tax rules. Legislation that would create a federal excise tax is written and being debated. And more excise taxes are in place or being put in place by counties and municipalities across the country.

The best part? Every jurisdiction has a different excise tax. Some are based on the mL volume, some are based on the wholesale price, some are based on MSRP, some are based on sales/retail price, and some are based on unit count. Some are percentage-based (e.g. Minnesota’s 95% of wholesale) while others are money-based (like Wisconsin’s $0.05 per mL).

With the quantity and differentiation of excise taxes in the country, vape company owners and operators can quickly feel overwhelmed by the complexity and weight of the burden. So, how are companies still operating anyways?

The short answer: they’re hiring specialized partners to help them navigate it all.

From accurately calculating the excise taxes due on each order to collecting it from their buyers at checkout to producing the required reports in the appropriate cadence and using the correct formatting for each jurisdiction, vape company owners and operators are maximizing their profits and saving time by outsourcing that work to experienced experts who focus on delivering solutions designed for the vape industry.

Of the potential partners, three stand out the most: IGEN, Avalara, and Token of Trust. IGEN and Avalara have been around longer, but haven’t focused solely on the vape industry. Token of Trust is younger, but their focus is on the vape industry and they have an excise tax collection tool that really works. Plus, they don’t charge the hundreds of thousands of dollars that the other two do. Here is a quick comparison chart:

To learn more about how you can both save time and maximize your profits, click here to speak with one of our experts today!

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