Indiana smokers are buying less tobacco. This is a reality. Are they smoking less? In Indiana, since July 1, the price of tobacco has risen due to the increase in taxes on this product. As a result, packs of tobacco are experiencing price increases of between $2 and $3. Some packs of tobacco can go up to $14. Therefore, those who can afford it are going to the neighboring state, Kentucky for example, to buy their tobacco at the same price they had in Indiana in June.
“We’re reducing government spending while funding our most critical priorities and providing tax relief for Hoosiers,” said House Speaker Todd Huston, pointing to continuing income tax cuts. “We’re in a good position to weather some potentially lean times because of our commitment to financial responsibility.” This move is seen as a way to make money while encouraging people to smoke less. Smoking is detrimental to health, and many consumers have already expressed their desire to quit. They have seen rising prices as an excuse to kick the bad habit.
“We are really pleased,” Mike Seilback, from the American Lung Association said
The state House and Senate approved the measure in the first half of 2025, motivated by a $2 billion budget deficit, despite vocal opposition from hundreds of state businesses.
There are sectors that are very grateful for the increase in tobacco rates in the state. “We are really pleased that the Legislature and Governor Mike Braun moved forward and approved an increase in these tobacco taxes,” said Mike Seilback, who is the national assistant vice president for state public policy at the American Lung Association.
“Those funds will offset increases to Medicaid”
Tax increases are one of the most effective ways to curb cigarette use, which does contribute to the state’s overall poor health metrics and Medicaid expenses. Cigarette taxes will increase by $2 to just under $3 a pack, with proportional increases for other forms of tobacco. Senator Ryan Mishler, R-Mishawaka, said those funds will offset increases to Medicaid. Such growth will bring in nearly $800 million in cigarette taxes alone with another $50 million for other forms of tobacco.
Some users say the price of tobacco is now on par with that of states with a higher cost of living, such as New York. The nearly 200 percent tax increase puts Indiana ahead of most of its neighbors in terms of tobacco prices, behind only Illinois. Taxes have risen on tobacco, but also on tobacco-related products.
“By increasing this tax, we expect many Hoosiers to take the opportunity to make another quit attempt”
“Most tobacco users want to quit, but nicotine is highly addictive — the average tobacco user tries to quit, you know, seven times before they’re successful,” Seilback said. “By increasing this tax, we expect many Hoosiers to take the opportunity to make another quit attempt and be successful.”
As we can see, this is a tax that both people like and dislike in equal measure. “I don’t think it’s a budget, at this point, that we can fully accept,” said Gregory Porter, a Democratic representative. He praised the inclusion of the cigarette tax increase and the IEDC’s scrutiny. The Indianapolis Democrat said he wouldn’t support the spending plan until he knew more about K-12 education funding and other provisions.
In conclusion, we’ll have to wait a few months to see the results of this tax increase. If the data is helpful, more states may join this idea, although it may not be a welcome development for smokers. For now, it’s no surprise that the border between Indiana and Kentucky is starting to become busier than usual.
