S4661

An Act concerning the taxation of liquid nicotine and container e-liquid, and amending P.L.2018, c.50 and P.L.2019, c.147.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 5 of P.L.2018, c.50 (C.54:40B-3.2) is amended to read as follows:

5. a. There is imposed a tax upon the sale, use, or distribution of liquid nicotine within this State by a distributor or wholesaler to a retail dealer or consumer at the rate of [$0.10] $0.30 per fluid milliliter on the volume of the liquid nicotine as listed by the manufacturer, and a proportionate rate on all fractional parts of a fluid milliliter of volume of liquid nicotine as listed by the manufacturer.

b. Unless liquid nicotine has already been or will be subject to the tax imposed in subsection a. of this section, if a distributor or wholesaler uses the liquid nicotine within the State, there is imposed upon the distributor or wholesaler a compensating use tax of [$0.10] $0.30 per fluid milliliter of the volume of liquid nicotine as listed by the manufacturer, and a proportionate rate on all fractional parts of a fluid milliliter of the volume of liquid nicotine as listed by the manufacturer.

c. Unless a tax is due pursuant to subsection b. of this section, if a distributor or wholesaler has not paid the tax imposed in subsection a. of this section upon a sale that is subject to the tax imposed in that subsection a., there is imposed upon the retail dealer or consumer chargeable for the sale a compensating use tax of [$0.10] $0.30 per fluid milliliter on the volume of the liquid nicotine as listed by the manufacturer, and a proportionate rate on all fractional parts of a fluid milliliter of the volume of liquid nicotine as listed by the manufacturer, which shall be collected in the manner provided in subsection b. of section 5 of P.L.1990, c.39 (C.54:40B-5).

d. The tax imposed pursuant to this section shall not apply to the sale, use, or distribution of container e-liquid.

(cf: P.L.2019, c.147, s.3)

2. Section 5 of P.L.2019, c.147 (C.54:40B-3.4) is amended to read as follows:

5. a. There is imposed a tax at the rate of [10] 30 percent of the listed retail sale price of container e-liquid sold within the State.

b. The tax imposed pursuant to this section shall be collected by the seller.

c. The seller shall be personally liable for the tax required to be collected pursuant to this section.

d. The director shall prescribe the manner and method that the tax shall be payable. The director may require such information and records necessary for administration of the tax, including for the purpose of consistent administration with other provisions of the "Tobacco and Vapor Products Tax Act," P.L.1990, c.39 (C.54:40B-1 et seq.).

(cf: P.L.2019, c.147, s.5)

3. (New section) Each distributor and wholesaler shall, on or before the first day of the second month after the effective date of P.L. , c. (pending before the Legislature as this bill), file a return, under oath or certified under the penalties of perjury, with the director on forms furnished by the director, showing the amount of liquid nicotine in that distributor’s or wholesaler’s possession in the State at 12:01 a.m. on the effective date of P.L. , c. (pending before the Legislature as this bill), and shall, at the time of filing that return, pay an amount of tax equal to the additional tax on the amount of liquid nicotine in that distributor’s or wholesaler’s possession to the director. Failure to obtain such forms shall not be an excuse for the failure to make a return containing the information required by the director.

4. (New section) Each retail dealer shall, on or before the first day of the second month after the effective date of P.L. , c. (pending before the Legislature as this bill), file a return, under oath or certified under the penalties of perjury, with the director on forms furnished by the director, showing the amount of liquid nicotine in that retail dealer’s possession, and shall file a return with the director in such form as the director may prescribe and shall, at the time of filing that return, pay an amount of tax equal to the additional tax on the amount of liquid nicotine in that retail dealer’s possession to the director. Failure to obtain such forms shall not be an excuse for the failure to make a return containing the information required by the director.

5. This act shall take effect on August 1, 2025.

STATEMENT

This bill increases the tax rate imposed on liquid nicotine and container e-liquid, as recommended as part of the Governor’s Fiscal Year 2026 Budget.

Under current law, liquid nicotine is taxed at a rate of $0.10 per fluid milliliter on the volume of liquid as listed by the manufacturer. Container e-liquid is taxed at the rate of 10 percent of the listed retail sale price for the product sold within the State.

This bill would increase the tax rate from $0.10 to $0.30 per fluid milliliter for liquid nicotine, and increase the tax rate on container e-liquid from 10 percent to 30 percent of the listed retail sale price. The bill’s provisions would take effect on August 1, 2025.

The bill would also require each distributor, wholesaler, and retailer of liquid nicotine to file returns with the Director of the Division of Taxation by the first day of the second month after the effective date. The returns would include the distributer’s, wholesaler’s, or retail dealer’s inventory of liquid nicotine and the payment of an amount equal to the additional amount of tax due on such liquid nicotine for the preceding month.

The Governor’s Fiscal Year 2026 Budget recommendations include the enactment of legislation to increase the tax rate on liquid nicotine and container e-liquid. This bill is intended to implement this recommendation.