SB 98 revises Montana’s tobacco excise tax law by creating a lower cigarette tax rate for cigarettes intended to be heated but not burned, while leaving the existing tax rate in place for cigarettes intended to be burned. Under the bill, a 20-cigarette package of burned cigarettes would remain taxed at $1.70, but a 20-cigarette package of heated-not-burned cigarettes would be taxed at 85 cents. The bill also retains the existing framework for taxing cigarettes sold on Montana Indian reservations, including precollection by wholesalers, refund or credit procedures for qualifying tax-exempt sales to tribal members, quota-based allocations, and reservation-specific administration by the Department of Revenue.
The bill also continues and restates Montana’s tobacco products tax structure for non-cigarette tobacco products. It imposes a 50% tax on the wholesale price of most tobacco products, with special rules for premium cigars and moist snuff, and requires wholesalers to precollect and remit the tax. Retailers who buy untaxed tobacco products for resale are treated as wholesalers for compliance purposes, and invoices must show when the tax has been included. The bill takes effect immediately upon passage and approval, but applies only to cigarettes sold by wholesalers after June 30, 2025.
Impact
SB 98 would amend section 16-11-111, MCA, to add a separate, reduced excise tax category for heated-not-burned cigarettes and to clarify the tax treatment of tobacco products generally. The practical effect is to lower the state tax burden on that product category relative to conventional cigarettes, while preserving the current tax collection and reservation quota system for cigarette sales on Montana Indian reservations and the existing tobacco products tax regime for wholesalers and retailers.
Sentiment
No committee transcript or recorded vote information was provided, so the bill’s sentiment can only be inferred from its content and final status. The measure appears to have been a targeted tax revision rather than a broad policy overhaul, but it ultimately died in process, suggesting it did not advance through the legislature. The absence of recorded debate makes it difficult to identify support or opposition beyond the bill’s apparent intent to create a preferential tax rate for heated tobacco products.
Contention
The main point of contention is likely the creation of a lower tax rate for cigarettes intended to be heated but not burned, which could be viewed as a tax preference for an alternative nicotine product. Potential opponents may have been concerned about fairness relative to traditional cigarettes, public health implications, or revenue loss, while supporters likely viewed the change as a modernization of the tax code to distinguish between product types. The bill also preserves the reservation quota/refund system, which can be administratively complex and may remain a recurring issue for wholesalers, tribes, and the Department of Revenue.