Delaware Tobacco Tax: Rates, Stamps, and Penalties

The Delaware tobacco tax is $2.10 on a standard 20-cigarette pack, 30% of the wholesale price on cigars and pipe tobacco, $0.92 per ounce on moist snuff, and $0.05 per milliliter on vapor liquid. The Division of Revenue administers the tax, wholesalers pay it by affixing state stamps to cigarette packs, and the cost is built into the retail price. If you sell, distribute, or manufacture tobacco in Delaware, you need a state license and must file monthly reports.

Tax Rates by Product

All rates are set in 30 Del. C. § 5305.

Cigarettes: 105 mills (10.5 cents) per cigarette, which comes to $2.10 on a pack of 20. Packs with a non-standard count are taxed proportionally and rounded up to the next whole cent.¹
Moist snuff: $0.92 per ounce, calculated from the net weight on the manufacturer’s label, with fractional ounces taxed proportionally.¹
Other tobacco products, including cigars and pipe tobacco: 30% of the wholesale purchase price.¹
Vapor products: $0.05 per fluid milliliter of nicotine liquid or other nicotine-containing material, based on the manufacturer’s stated volume. The tax hits the liquid only, not the device.¹

The current cigarette rate took effect September 1, 2017. The vapor product rate took effect January 1, 2018.²

Which Rate Applies to Which Product

The definitions in 30 Del. C. § 5301 decide which rate you use, and one detail matters more than the rest: what the wrapper is made of.

A cigarette is a roll for smoking, of any size, shape, or flavor, wrapped in paper or any material other than tobacco. If the wrapper is tobacco leaf, the product is a cigar and falls under the 30% wholesale-price rate rather than the per-unit cigarette rate.³

Moist snuff means finely cut, ground, or powdered tobacco not intended for smoking. Dry powdered tobacco meant for the nasal cavity is excluded from the moist snuff category, so the $0.92 per ounce rate covers dipping and chewing products only.³

Vapor product means the nicotine liquid or other nicotine-containing material used in an electronic smoking device. E-cigarettes, e-cigars, e-pipes, and vape pens all count as electronic smoking devices regardless of what the manufacturer calls them, but the tax applies to the fluid, not the hardware.³

Exemptions

Delaware cannot tax sales the U.S. Constitution or federal law shields from state taxation, which generally means sales on federal military installations and tribal lands. Beyond that, § 5305(e) recognizes two narrow statutory exemptions, both requiring the seller and buyer to register with the Department of Finance and hold exemption certificates before the sale:

Approved veterans’ organizations buying tobacco to give free of charge to veteran patients in federal, state, or state-aided hospitals.⁴
Retail dealers located inside Veterans’ Administration hospitals selling to patients in those hospitals.⁴

Without the certificate on file, the Division of Revenue treats the sale as taxable.

Licenses to Sell Tobacco in Delaware

You cannot manufacture, buy for resale, sell, distribute, or act as an affixing agent for tobacco products in Delaware without the correct license from the Department of Finance.⁴ Three license types are issued annually:

Applications go to the Department of Finance on the prescribed form and must list every business location. Partnerships and corporations must also list every partner or principal officer.⁵

Cigarette Tax Stamps

The cigarette tax is collected through a stamp system. Under 30 Del. C. § 5315, the authorized affixing agent (the licensed wholesaler who first possesses the cigarettes in Delaware) buys tax stamps from the Division of Revenue and applies one to every pack before the product moves to retail.⁴ Stamps are heat-applied decals sold only to authorized wholesalers.²

Each stamp must be placed so the buyer can see it, and the affixing agent must cancel the stamp immediately after applying it in the manner the Department prescribes.⁴ Affixing agents receive a 0.3% discount on stamp purchases to offset labor.²

Monthly Filing

Wholesalers file monthly reports covering the prior month’s activity: stamps purchased, inventory movement, and quantities sold. The Division of Revenue provides the forms, and returns can be filed electronically through the state’s taxpayer portal or on paper by mail.² Tax owed is calculated by multiplying units sold by the applicable rate for each product category. If you sold to an exempt buyer, keep the exemption certificate and supporting invoice with your records to back up the exclusion.

Penalties

Delaware splits tobacco tax penalties between two provisions in Subchapter IV.

Unstamped Sales, Counterfeiting, and Refusing Inspection

Under § 5341, you cannot sell any pack without the proper Delaware stamps, you cannot refuse Department of Finance inspection of books, records, inventory, premises, or equipment, and you cannot forge, counterfeit, or reuse a stamp. A violation carries a fine of up to $1,000, up to one year in jail, or both.⁶

Holding Untaxed Product

Under § 5342, anyone who is not an affixing agent or exemption certificate holder cannot possess 10 or more packs of tobacco without Delaware stamps or on which the tax has not been paid. For a dealer with improperly stamped product at the place of business, the penalty is a fine of $100 to $1,000, up to 90 days in jail, or both. There is a 72-hour grace window: if you received the shipment within the last three days and the containers are marked with the receipt date, you are not in violation. Once that window closes, the unstamped inventory is a violation.⁶

Federal Rules That Also Apply

A Delaware license does not cover federal obligations that sit on top of the state tax.

The federal minimum purchase age for any tobacco product, including e-cigarettes and non-tobacco nicotine products, is 21, with no exception for active-duty military. Retailers must check a photo ID for anyone who appears under 30.⁷ Delaware’s Alcohol and Tobacco Enforcement division applies a zero-tolerance policy for sales to anyone under 21.⁸ Cigarettes, smokeless tobacco, and other covered products cannot be sold through vending machines in any facility where people under 21 are present or allowed to enter.

The federal Prevent All Cigarette Trafficking (PACT) Act bans mailing cigarettes, smokeless tobacco, and electronic nicotine delivery systems through the U.S. Postal Service. Anyone in interstate tobacco sales must also file a monthly electronic report with each state they ship into by the 10th of each month, even for months with no shipments.⁹

Manufacturers, importers, and exporters need a separate federal permit from the Alcohol and Tobacco Tax and Trade Bureau (TTB) before operating. There is no federal fee, but TTB approval must come before any activity starts. This permit does not replace the Delaware wholesale license.¹⁰

1
Justia. Delaware Code Title 30 Section 5305
2
Delaware Division of Revenue. Cigarette and Tobacco Tax FAQs
3
Delaware Code. Delaware Code Title 30 Chapter 53 – Tobacco Product Taxation and Licensing, Subchapter I
4
Delaware Code. Delaware Code Title 30 Chapter 53 – Tobacco Product Taxation and Licensing, Subchapter II
5
Justia. Delaware Code Title 30 Section 5309 – Application for License
6
Delaware Code. Delaware Code Title 30 Chapter 53 – Tobacco Product Taxation and Licensing, Subchapter IV
7
U.S. Food and Drug Administration. Tobacco 21
8
State of Delaware. Alcohol and Tobacco Enforcement – Tobacco Enforcement
9
Bureau of Alcohol, Tobacco, Firearms and Explosives. Prevent All Cigarette Trafficking (PACT) Act
10
Alcohol and Tobacco Tax and Trade Bureau. Applying for a Permit and/or Registration