INDIANA — A newly released policy analysis reveals that Indiana’s 2025 tobacco tax hike has successfully driven down tobacco and nicotine consumption across the state.
The report, published on Thursday by the CDC Foundation’s “Economics for Health” initiative, utilizes retail scanner data to provide the first comprehensive look at how the market responded to the landmark legislation.
Effective July 1, 2025, Indiana significantly raised its cigarette tax from $0.995 to $2.995 per pack—a flat $2.00 increase. The law also doubled the state’s e-cigarette tax from 15% to 30% and raised taxes on various other tobacco products.
According to early evidence from the second half of 2025, the policy has had an immediate impact on consumer behavior.
Indiana sold an estimated 12.6 million fewer cigarette packs in the final six months of 2025 compared to a reference control state. This represents an approximate 13.8% decline in biweekly pack sales.
Unit sales for e-cigarettes also experienced a downward trend, dropping by an estimated 8.3% after the tax took effect.
Average retail cigarette prices rose by about $2.00 per pack, matching the statutory tax increase. Premium cigarette brands saw the sharpest reaction, with a 19.7% drop in sales following a $2.31 per pack price increase.
Despite the notable drop in total volume sold, the tax change substantially boosted state funding, bringing in an estimated $170.4 million in added tobacco tax revenue between July and December 2025. Researchers also noted “little if any” spillovers or meaningful state-level sales increases in bordering states like Illinois, Kentucky, Michigan, or Ohio, indicating that Hoosiers were not simply crossing state lines to purchase tobacco.
Health organizations are viewing the data as a major victory for public health, noting that higher costs are one of the most effective tools to prevent addiction.
Christina Cesnik, Indiana Government Relations Director for the American Heart Association, released a statement praising the early results.
“The American Heart Association is committed to bringing health and hope to everyone everywhere, which includes protecting youth from the burdens of tobacco and nicotine addiction as well as helping adult smokers quit,” said Christina Cesnik. “Strategies such as tax increases and funding prevention and cessation programs have proven to be effective in reducing tobacco use time after time. This will translate into fewer heart attacks and chronic health conditions that are a direct result of tobacco use.”
The report’s authors—Samuel Sturm, Amit Summan, Fatma Romeh M. Ali, and Jeffrey Drope—concluded that while the e-cigarette findings are still developing, the overall data provide coherent, policy-relevant evidence that increasing tobacco taxes directly triggers a post-tax market reduction in smoking.
