Nebraska bill would undermine public health by taxing safer nicotine alternatives

A version of the following public comment was submitted to the Nebraska Revenue Committee on February 4, 2026.

We are concerned that equalizing excise taxes across all tobacco and nicotine products at 30% of wholesale cost would undermine public health, punish smokers switching to safer nicotine alternatives, and create similar cross-border shopping and smuggling problems as outlined in my testimony on Legislative Bill 1124.

The Food and Drug Administration’s authorization of 26 nicotine pouches as “appropriate for the protection of public health” recognizes that non-combustible nicotine products present dramatically lower health risks than combustible cigarettes. Taxing these products equally despite their unequal risks is the exact opposite of sound public health policy.

A rational tax policy would recognize the continuum of risk among nicotine products and tax them accordingly. Combustible cigarettes should and do bear the highest tax burden in Nebraska. Non-combustible alternatives like nicotine pouches and vapor products, which eliminate the combustion that causes most harm, should be taxed substantially less to encourage substitution away from cigarettes. By taxing all products equally, LB1238 removes the price incentive for adult smokers to switch to substantially safer alternatives.

Many Nebraska adults have successfully quit smoking by switching to non-combustible nicotine products. These individuals made a positive health decision that reduced their risk of cancer, heart disease, and other smoking-related illnesses. LB1238 would punish these adults by increasing the cost of the products that helped them quit smoking. For nicotine pouches, the tax would increase from 20% to 30%—a 50% relative increase. This creates a perverse incentive structure: Adult consumers who switched to safer products would face higher costs, potentially driving some back to cigarettes or to illicit markets where product safety cannot be guaranteed.

While protecting youth from nicotine is a legitimate policy goal, LB1238’s blanket approach is not justified by youth use patterns. Current youth use rates for nicotine pouches and e-cigarettes remain in the low single digits nationally. When the FDA authorized 20 nicotine pouch products in January 2025, they specifically evaluated the risk of underage use and determined these products were not sufficiently appealing to minors to warrant denial of authorization.

Like LB1124, LB1238 would create substantial price differentials with neighboring states, driving Nebraska consumers across state lines. Missouri has no specific tax on vapor products or nicotine pouches, while Wyoming imposes a 15% wholesale tax. Experience in other states shows that harmonized high taxes across product categories simply expand the total market available to smugglers and cross-border retailers. LB1238 would undermine public health by discouraging adults who make healthier choices and would fail to generate projected revenues while driving legitimate commerce out of state.

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