New York Reports High Cigarette Smuggling Rates
A 2024 report estimates that over 60 percent of cigarettes consumed in New York were smuggled into the state.
Updated on Oct. 28, 2026 in Taxes
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Should states maintain high cigarette taxes even if they drive significant tax evasion and smuggling?
Data from a 2024 Tax Foundation report estimates that 61.1 percent of all cigarettes consumed in New York were smuggled. This widespread tax avoidance resulted in an estimated $1.23 billion loss in tax revenue for the state.
Why it matters
Significant price disparities between states, driven by New York's $5.35 per pack excise tax, incentivize consumers to seek lower-cost alternatives and create opportunities for large-scale trafficking. Officials increased these taxes to curb tobacco use, but the resulting evasion complicates fiscal projections and enforcement efforts.
The report estimates that 61.1 percent of cigarettes consumed in New York in 2024 were smuggled, amounting to approximately 230.7 million packs. This activity led to a total state revenue loss of $1.23 billion.
The players
Tax Foundation
This is a nonpartisan research organization that provides data and analysis on tax policy and economic issues.
New York State Police
This is the primary law enforcement agency responsible for patrolling highways and enforcing state tax laws.
The details
Researchers utilized a statistical model comparing official tax-paid sales volumes with estimated consumption levels derived from smoking rates. While New York state imposes a $5.35 excise tax per pack, neighboring states like Pennsylvania and New Jersey maintain significantly lower tax rates at $2.60 and $2.70 respectively.
Timeline
September 1, 2023: The New York state cigarette excise tax increased to $5.35 per pack.
2024: This period saw an estimated 61.1 percent of cigarettes consumed in New York involve smuggling.
March 31, 2026: New York State Police seized 874,000 untaxed cigarettes during a traffic stop in Oswego County.
October 26, 2026: The Tax Foundation report was published.
Market Landscape
The rise in smuggling activity directly follows the adjustment of New York's cigarette excise tax rate, which created a significant price gap compared to neighboring jurisdictions. This market distortion incentivizes both personal cross-border shopping and large-scale illicit distribution.
Consumers in New York face a combined state and city tax burden of $6.85 per pack, which significantly impacts household budgets for smokers. This price environment continues to fuel law enforcement seizures, such as the major traffic stop recovery in Oswego County.
The takeaway
High excise taxes intended to discourage smoking often lead to unintended fiscal losses as consumers turn to unregulated markets. Residents should be aware that transporting large quantities of untaxed cigarettes remains a target for state law enforcement investigations.
Further reading
Learn more about local fiscal policies on the New York Taxes section of our site.
Live Poll
Should states maintain high cigarette taxes even if they drive significant tax evasion and smuggling?
