Tobacco and Fuel Excise Tax Changes Taking Effect in 2026
2026 marks a significant shift in excise tax systems globally, impacting industries from tobacco to fuels. These changes, driven by budget laws and legislative decrees, aim to improve consumption traceability, eliminate environmentally harmful subsidies, and align with evolving European frameworks. Here’s a breakdown of the key adjustments and their implications.
Changes to Tobacco Excise Taxes
Several regions are implementing substantial revisions to tobacco excise taxes. New Jersey, for example, is increasing the tax on cigarettes from $2.70 to $3.00 per pack of 20, and the tax on liquid nicotine from $0.10 to $0.30 per fluid milliliter, effective January 1, 2026 [NJ Division of Taxation].
In Italy, adjustments to excise duties on tobacco and similar products are being phased in. Increases to the minimum amount and specific component on traditional tobacco are occurring over a multi-year trajectory, with potential increases of up to EUR 38 [Il Sole 24 Ore]. As of March 4, 2026, approximately 58% of cigarette brands have seen price increases, averaging around +0.26 euros per package, while 42% have remained unchanged. The general average increase is approximately +0.18 euros [Il Sole 24 Ore].
Ukraine also saw significant revenue increases from tobacco excise taxes in 2025, reaching UAH 122.5 billion, a 27% increase from 2024. This was accompanied by a decrease in cigarette consumption to 26.2 billion items (-10%) and HTP consumption to 6.1 billion items (-15%) [Center for Life].
Energy Sector Adjustments
For electricity and natural gas, rates remain unchanged, but tax management is being reformed. The focus is on differentiating between domestic and non-domestic use, requiring more accurate tracking and qualification of consumption. New declaration methods – monthly obligations and half-yearly declarations – are being implemented to align excise duties more closely with VAT, creating a more timely and consistent system based on actual consumption [Il Sole 24 Ore].
Broader Excise System Redesign
These changes are part of a broader redesign of excise tax systems, as outlined in the Budget Law and Legislative Decree 43/2025, which reformed the Single Text on Excise Duties (Tua) [Il Sole 24 Ore]. The overall goal is to improve traceability, promote ecological transition, and ensure greater fairness in tax collection.
Other Excise Tax Updates
New Jersey has also imposed an excise tax of $3.75 per gallon on intoxicating hemp beverages, effective January 13, 2026 [NJ Division of Taxation]. A $3 per day surcharge is being applied to hotel occupancies in cities of the first class with international airports, such as Newark, starting January 1, 2026 [NJ Division of Taxation].