By: Tracy Sanders, Publisher | tracy@thewoodrufftimes.com
COLUMBIA, S.C. — South Carolina will begin collecting a new tax on nicotine-containing vapor products Oct. 1, adding another layer of state regulation for electronic cigarettes and e-liquids.
The tax, enacted through House Bill 4303, will be assessed at 5 cents per milliliter of consumable nicotine liquid or other nicotine-containing material depleted as a vapor product is used.
Gov. Henry McMaster signed the legislation May 19, making it Act 234 of 2026. Revenue generated by the new tax must be deposited into the South Carolina Medicaid Reserve Fund.
According to the South Carolina Department of Revenue, the tax applies to vapor products, electronic cigarettes and e-liquids containing consumable nicotine. Businesses subject to the tax must begin collecting it Oct. 1, and their first monthly return will be due Nov. 20.
Who is responsible for the tax?
SCDOR says responsibility generally falls on the first person or business purchasing or selling the taxable product.
Businesses that may be required to obtain a free nicotine vapor products license include:
- In-state wholesalers, distributors and manufacturers that first receive the products in South Carolina
- Out-of-state wholesalers, distributors and manufacturers selling to South Carolina retailers or consumers
- Retailers purchasing untaxed products from an out-of-state supplier
- Retailers that manufacture or mix nicotine-containing e-liquids for consumers
- Vending-machine operators purchasing and selling untaxed products
Affected taxpayers must register, file their returns and pay the tax electronically through MyDORWAY. The new tax-account application is scheduled to become available Sept. 24.
How the tax could affect different products
Because the levy is based on liquid volume rather than nicotine concentration or retail price, its effect will vary by product.
For example, a 2-milliliter nicotine product would carry a 10-cent state tax, while a 30-milliliter bottle would carry a $1.50 tax. A 100-milliliter bottle would be taxed $5.
That structure means larger bottles of lower-concentration e-liquid may face a higher total tax than smaller products containing more concentrated nicotine.
Supporters of vapor taxes generally argue that increasing the cost of nicotine products may discourage use, particularly among younger consumers, while producing revenue for state programs. Critics contend that a volume-based system may place a greater burden on businesses and customers who use larger refillable products.
The law itself does not require retailers to pass the full cost of the tax directly to customers. However, businesses may adjust their prices to account for the additional expense.
Separate vapor-product directory coming in 2027
The tax arrives as South Carolina prepares to implement a separate regulatory system for electronic nicotine delivery products.
McMaster signed Senate Bill 287, now Act 97, on Feb. 27. The law requires the South Carolina attorney general to establish a directory of vapor-product manufacturers and individual products eligible for sale in the state.
Manufacturers must certify that each listed product meets one of the law’s qualifying federal regulatory conditions. Those conditions include having an FDA marketing authorization, having a qualifying premarket tobacco product application still under review or having a denial order that has been stayed, rescinded or vacated.
The first manufacturer certifications are due Jan. 1, 2027. The directory must become operational by Feb. 1, 2027, or when the attorney general makes it publicly available, whichever occurs later.
Once the directory becomes operational and applicable grace periods expire, products not included in it generally may not be sold in South Carolina. The law also provides penalties and authorizes enforcement agencies to seize certain noncompliant products.
Together, the new tax and the forthcoming product directory represent a significant expansion of South Carolina’s oversight of the nicotine-vapor industry.
