At least 20 U.S. states sought to tax nicotine pouches through legislation last year as a way to obtain more revenue and to protect public health, but some experts say the health risks may be overstated.
There is a growing consensus that higher taxes on oral nicotine pouches, the most popular brand of which is ZYN, may actually discourage people from consuming safer nicotine alternatives and encourage them to continue smoking tobacco.
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Guy Bentley, director of consumer freedom at the Reason Foundation, makes the case that nicotine pouches should be taxed considerably less than cigarettes because they are much less dangerous for the health of customers and those around them.
“If you are going to tax pouches, make it a very, very, very low rate and let the difference between that and the cigarette tax be very, very wide,” he told the Washington Examiner. “So you’ve got a big financial incentive to switch from cigarettes to the safer product.”
Regulation for nicotine pouches is garnering attention right now because of the 75% wholesale excise tax currently under consideration by the New York legislature. The measure was included in Gov. Kathy Hochul’s (D-NY) fiscal 2027 budget proposal. The budget has not yet been approved, but opposition against the nicotine tax is getting stronger.
Steve Forbes, the chairman and editor-in-chief of Forbes, recently wrote an article explaining why Hochul’s proposed tax should not be adopted. He cited much of the same reasoning that Bentley outlined in his written testimony to the state legislature, including the reduced health risks of nicotine alternatives compared to traditional tobacco products.
Nicotine may be highly addictive, but tobacco is far more harmful when lit and produces smoke because of the cancer-causing chemicals involved in the combustion process. Because nicotine pouches contain no tobacco, they are often used as a substitute for cigarettes and can be quite helpful for getting customers to quit smoking.
The Food and Drug Administration recognized this dynamic between the two types of products last year when it authorized the sale of 20 ZYN nicotine pouch products and confirmed they meet the public health standard after extensive scientific review.
Ignoring the findings, Hochul’s budget director, Blake Washington, claimed pouches and cigarettes are “a distinction without a difference.” Bentley called that statement “bonkers” for suggesting they are equally harmful to the state population and using that to justify taxing pouches at cigarette-level rates.
“If you’re losing your cigarette tax revenue, perhaps you can convince yourself that there is a good public health reason to tax these products to try and claw back the revenue you’re losing from people quitting smoking,” he said of New York’s flawed argument.
Part of the reason for a nicotine tax is to deter youth from using nicotine, but the FDA determined the benefits of adult smokers who switch to pouches outweigh the risks of youth consumption. It is relatively true that minors don’t tend to consume oral nicotine products as much as adults.
Their lack of appeal to youth is demonstrated by the 2025 National Youth Tobacco Survey, which shows 1.7% of middle and high school students have used nicotine pouches in the past month. The figure is not much of a statistical change from the prior year at 1.8%.
Similarly, the product is not common among adults either, despite its rapid increase in sales over the past few years. Only 2.9% of adults consumed nicotine pouches, according to a 2024 study. A Rutgers University researcher also found that 2.5% of adults used the product.
Most of the adults regularly using nicotine pouches had a history of tobacco use and had quit smoking, Dr. Cristine Delnevo discovered in her research. This suggests the pouches played a vital role in helping smokers move past their harmful habit.
“People who have never used tobacco products should not suddenly be using nicotine pouches,” she said in a press release featuring her findings last year. “But for people who smoke or use other nicotine products and don’t want to stop using nicotine, switching completely from the more harmful product and moving down the risk continuum with nicotine pouches is a likely good for public health.”
Taxing nicotine pouches and tobacco products at comparably high rates could possibly pose a hindrance to the protection of public health because people would be less likely to pay for the safer option if it costs as much or more than cigarettes.
Regarding the proposed nicotine tax in New York, Delnevo said, tax policy should reflect relative risk.
“Taxing nicotine pouches the same as other tobacco products could undermine harm reduction, while leaving them untaxed could encourage youth uptake,” she told the Washington Examiner. “A differentiated, evidence-based tax — above zero but below cigarettes — best serves public health.”
A growing body of economic literature shows the unintended consequences of increased nicotine taxes.
A 2020 medical study showed about 32,400 adults in Minnesota would have quit smoking if the state hadn’t enacted a 95% wholesale tax on e-cigarettes and vaping products in 2013. If the same tax were applied to the rest of the nation, about 1.8 million smokers would have been deterred from quitting in the span of a decade, the study found.
“The public health benefits of not taxing e-cigarettes, however, must be weighed against effects of this decision on efforts to reduce vaping by youth,” the study’s abstract stated as a caveat.
The Campaign for Tobacco-Free Kids makes its mission all about protecting youth from tobacco use and its deadly consequences. The nonprofit advocacy organization argues nicotine pouches should be lumped together with tobacco.
“States should make sure that nicotine pouches are included in state definitions for tobacco products or smokeless tobacco products so that state tobacco policies, including excise taxes and sales restrictions on flavored products, will apply to them,” the group said in a document published in January.
The Washington Examiner contacted CTFK for comment on whether it had a rebuttal to the argument advanced by an expert, such as Bentley. No response was provided.
While New York weighs the so-called ZYN tax, other states have arguably more sensible policies for taxing such products.
Wisconsin and Oklahoma do not have oral nicotine pouch taxes on the books, but they do follow the guideline of charging the most dangerous products more than those lower on the risk continuum.
Nebraska and Georgia have some of the lowest wholesale nicotine taxes in the nation at 20% and 10%, respectively. By contrast, Minnesota imposes the highest at 95% wholesale price, the same rate as e-cigarettes, and Rhode Island has a similarly high rate at 80% wholesale price.
If New York were to tax nicotine pouches, the rate would match that of cigarettes. This would test Bentley’s theory about smokers being less inclined to switch to nicotine pouches if they’re as expensive as cigarettes.
It remains to be seen if the perceived economic benefits of the proposed tax, if approved, will outweigh the possible harms to public health.
Hochul’s budget proposal estimates the state will bring in about $18 million in revenue from the tax this fiscal year and at least another $44 million annually when the measure is fully implemented the following year.
Americans for Tax Reform is not very confident in the governor’s plan to generate more state income, given the New York government’s predisposition to spending large amounts of money every year, which has contributed to the current $12.6 billion budget gap.
“Any tax hike will only make the state more unaffordable, while doing little to increase revenue figures and nothing to contain spending,” the advocacy group said in written testimony to the state legislature. “In the case of Governor Hochul’s proposal to onerously increase taxes on nicotine products that offer an alternative to smoking, these taxes may well reduce revenues.”
