Excise Tax in New York: Complete Guide 2026
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Excise Tax in New York: Complete Guide 2026
Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.
New York imposes excise taxes on a wide range of products and services, including fuel, tobacco, alcohol, and cannabis. The state’s cigarette excise tax of approximately ~$5.35 per pack (state and city combined in New York City) is among the highest in the nation, and its alcohol excise taxes — particularly on distilled spirits — are also above the national average. These taxes generate approximately ~$4 billion annually for the state and fund a range of programs from transportation infrastructure to public health.
New York Excise Tax Rates (2026)
Fuel Taxes
| Fuel Type | State Rate per Gallon | Federal Rate per Gallon | Combined |
|---|---|---|---|
| Gasoline | ~$0.338 | ~$0.184 | ~$0.522 |
| Diesel | ~$0.322 | ~$0.244 | ~$0.566 |
In addition to the state excise, New York applies a petroleum business tax (PBT) of approximately ~$0.178 per gallon on gasoline, bringing the total state-level fuel tax to approximately ~$0.516 per gallon before sales tax.
Tobacco Taxes
| Product | State Rate |
|---|---|
| Cigarettes (per pack of 20) | ~$4.35 |
| NYC additional cigarette tax | ~$1.50 per pack |
| Combined NYC total (state + city) | ~$5.85 per pack |
| Cigars | ~75% of wholesale price (capped at ~$0.50 per cigar) |
| Smokeless tobacco | ~$2.00 per container (snuff) |
| Vaping / electronic cigarettes | ~20% of retail price |
New York’s combined cigarette excise tax in New York City (state plus city) makes it one of the most expensive places to buy cigarettes in the nation, with total taxes (including federal) reaching approximately ~$6.86 per pack.
Alcohol Taxes
| Product | State Rate |
|---|---|
| Beer (per gallon) | ~$0.14 |
| Wine (per gallon) | ~$0.30 |
| Distilled spirits (per liter) | ~$1.70 (approximately ~$6.44 per gallon) |
Cannabis Taxes
| Tax Type | Rate |
|---|---|
| THC content tax (flower) | ~$0.005 per milligram of THC |
| THC content tax (concentrates) | ~$0.008 per milligram of THC |
| THC content tax (edibles) | ~$0.03 per milligram of THC |
| State sales tax on cannabis | ~9% |
New York’s cannabis tax structure uses a potency-based model tied to THC content rather than a flat percentage of price, making it one of the more complex cannabis tax systems in the country.
How New York Excise Taxes Work
Fuel Excise Tax and Petroleum Business Tax
New York’s fuel taxes include both a motor fuel excise tax and a petroleum business tax (PBT). The motor fuel excise tax of approximately ~$0.338 per gallon is paid by distributors and passed through to consumers. The PBT of approximately ~$0.178 per gallon is levied on petroleum businesses based on gallons sold. Additionally, a sales tax applies to fuel at both the state and local levels, though New York temporarily suspended a portion of the sales tax on fuel during periods of high gas prices.
Revenue from fuel taxes funds the Dedicated Highway and Bridge Trust Fund, supporting road maintenance, bridge repairs, and mass transit improvements.
Tobacco Excise Tax
New York’s cigarette excise tax of approximately ~$4.35 per pack is the third-highest state cigarette tax in the nation. In New York City, an additional city tax of approximately ~$1.50 per pack brings the combined city total to approximately ~$5.85 before federal tax. The high tax rates have made cigarette smuggling a significant concern; studies estimate that approximately ~50% to ~55% of cigarettes consumed in New York are smuggled from lower-tax states.
The ~20% retail price tax on vaping and electronic cigarettes was enacted to address youth vaping and to prevent tax arbitrage between tobacco and electronic alternatives.
Alcohol Excise Tax
New York’s alcohol excise taxes are collected from licensed manufacturers, distributors, and wholesalers. The beer tax of approximately ~$0.14 per gallon is below the national average, while the distilled spirits tax of approximately ~$6.44 per gallon is well above average. The state also operates a licensing system for liquor sales that generates additional fee revenue.
Comparison to Other States
| Category | New York | California | Illinois | National Avg. |
|---|---|---|---|---|
| Gasoline excise (per gallon) | ~$0.338 | ~$0.596 | ~$0.392 | ~$0.31 |
| Cigarettes (per pack, state only) | ~$4.35 | ~$2.87 | ~$2.98 | ~$1.91 |
| Beer (per gallon) | ~$0.14 | ~$0.20 | ~$0.23 | ~$0.25 |
| Distilled spirits (per gallon) | ~$6.44 | ~$3.30 | ~$8.55 | ~$4.50 |
New York’s cigarette and spirits taxes are above national averages, while its gasoline and beer taxes are more moderate.
Tips for Businesses Subject to New York Excise Taxes
- Register with the NYS Department of Taxation and Finance. All manufacturers, distributors, and importers of excise-taxable goods must hold appropriate licenses and file returns.
- Separate state and city cigarette taxes. Businesses operating in New York City must account for both the ~$4.35 state tax and the ~$1.50 city tax.
- Understand the cannabis potency-based tax. Unlike percentage-based cannabis taxes in other states, New York’s per-milligram THC tax requires accurate potency testing and reporting.
- Track PBT separately from fuel excise. The petroleum business tax is a distinct obligation from the motor fuel excise tax and is reported on separate returns.
- Claim applicable credits and exemptions. Certain fuel uses (aviation, agricultural, governmental) qualify for excise tax refunds or exemptions.
- Monitor cigarette tax compliance. Given high smuggling rates, the state actively audits cigarette distributors and retailers. Maintain detailed purchase and sales records.
- File on time to avoid penalties. Late-filing penalties of approximately ~10% of the unpaid tax, plus ~1% per month interest, apply to most excise tax categories.
Key Takeaways
- New York’s cigarette excise tax of approximately ~$4.35 per pack (plus ~$1.50 in NYC) is among the highest in the nation
- The state gasoline tax of approximately ~$0.338 per gallon, plus the PBT of approximately ~$0.178, brings total state fuel taxes to approximately ~$0.516 per gallon
- New York’s cannabis tax uses a potency-based model at rates of approximately ~$0.005 to ~$0.03 per milligram of THC
- Distilled spirits are taxed at approximately ~$6.44 per gallon, well above the national average of approximately ~$4.50
- Combined fuel taxes (state, federal, PBT, and sales tax) make New York one of the most expensive states for gasoline
- Cigarette smuggling from lower-tax states is a significant compliance concern, accounting for an estimated ~50% to ~55% of consumption
Next Steps
- See the full New York tax picture at Taxes in New York: State Tax Guide 2026
- Explore sales tax obligations at Sales Tax in New York 2026
- Learn about federal taxes in the Federal Income Tax Guide 2026
- Compare state tax burdens at State Income Tax Rates Comparison 2026
- Get local help: Find a CPA Near You