Tax Guide for California Electronic Cigarette Excise Tax

New Information

  • Senate Bill (SB) 793 (Stats. 2020, ch. 34), was approved at the November 8, 2022, election in the Proposition 31 referendum. Effective December 21, 2022, cigarette and tobacco products retailers, including their employees or agents, may not sell, offer, or possess with the intent to sell, menthol cigarettes, most flavored tobacco products, and tobacco product flavor enhancers.

    The law does not apply to flavored premium cigars with a wholesale price (retailer's purchase price) of $12.00 or more and flavored loose-leaf pipe tobacco. Flavored shisha/hookah tobacco may be sold in licensed retail stores that only admit persons 21 or older and operate following all state and/or local laws.

    For more information, please visit the California Department of Public Health's website for frequently asked questions, a fact sheet, and other useful resources. Also, read our special notice, New Law Prohibits Retail Sales of Menthol Cigarettes and Most Flavored Tobacco Products.

Helping businesses succeed is important to the California Department of Tax and Fee Administration (CDTFA). The taxes or fees paid to the state help fund state and local services and programs that are important to our communities.

This guide is intended to provide general information about the California Electronic Cigarette Excise Tax and registration, collection, filing, and payment responsibilities of retailers of electronic cigarettes containing or sold with nicotine.

California Electronic Cigarette Excise Tax

Beginning July 1, 2022, retailers of electronic cigarettes (in-state or out-of-state) are required to collect from the purchaser at the time of sale the California Electronic Cigarette Excise Tax (CECET) at the rate of 12.5 percent (12.50%) of the retail selling price of electronic cigarettes containing or sold with nicotine. The collection of the CECET is in addition to the sales and use tax.

A retailer of electronic cigarettes containing or sold with nicotine must:

  • Be registered with a CECET permit (account),
  • Include the CECET amount in any price marketing on any sign or display,
  • Collect the CECET from the purchaser at the rate of 12.5 percent (12.50%) of the retail selling price of electronic cigarettes containing or sold with nicotine at the time of sale,
  • Provide the purchaser with a receipt or other document that separately states the CECET and the amount they paid on each electronic cigarette retail sale,
  • File a CECET return electronically, and
  • Pay the excise tax to us (CDTFA).

Senate Bill (SB) 395 (Stats. 2021, ch. 489) enacted the Healthy Outcomes and Prevention Education (HOPE) Act, which imposes the CECET.

In addition to the HOPE Act, we administer other cigarette and tobacco products laws affecting retailers of electronic cigarettes containing or sold with nicotine. Retailers of electronic cigarettes containing or sold with nicotine also have responsibilities under the Cigarette and Tobacco Products Licensing Act of 2003. For more information, please visit our Tax Guide for Cigarettes and Tobacco Products.

How the Revenue is Used

Revenues collected, including interest and penalties, from the CECET are deposited into the California Electronic Cigarette Excise Tax Fund. The proceeds from the CECET, less refunds and administration/collection expenses, are used to fund essential safety net services and provide grants to students from disadvantaged backgrounds pursuing an education in the health field to combat the long-term negative impacts of tobacco products.

For detailed information on how the funds are used, see Revenue and Taxation Code (R&TC) section 31005.

How to Use This Guide

The Getting Started section provides key resources related to registration, filing returns, making payments, and other important information.

The Industry Topics section provides general definitions, examples of tax computation, and revocations.

The Resources section provides links to helpful information, including law and regulation information, guides, publications, special notices, and access to assistance from our customer service representatives.

If You Need Help

For assistance with topics included in this guide or other related questions, please email us or call our Customer Service Center at 1-800-400-7115 (CRS:711). Customer service representatives are available Monday through Friday from 7:30 a.m. to 5:00 p.m. (Pacific time), except state holidays. Additional contact information and hours of operation are available on our How to Contact Us webpage.

If you have suggestions for improving this guide, please contact us via email.