TT-75 – Definition of premium cigars
Understand which cigars qualify as premium and how to apply the correct tax rate
Maryland law strictly defines what qualifies as a premium cigar for tax purposes. This page explains how to identify qualifying cigars and when a higher tax rate applies to avoid penalties.
What you need to know
- Premium cigars cannot have filters, tips, or non-tobacco mouthpieces
- Labels like “premium” or “hand rolled” are not enough
- Non-qualifying cigars must be taxed at 70% of wholesale price
- Incorrect tax reporting may result in penalties and interest
Who This Applies To
- Wholesalers of other tobacco products
- Retailers of other tobacco products
What Changed
- Clarification on how premium cigars are defined for tax purposes
- Enforcement focus on cigars with filters, tips, or non-tobacco mouthpieces
- Stricter application of the correct tax rate
Requirements / Process / Rules
A premium cigar must meet all of the following:
- Made from whole tobacco leaves
- Filler, binder, and wrapper are all tobacco
- May include adhesives to maintain size or flavor
- Must not include filters, tips, or non-tobacco mouthpieces
- Do not rely on packaging labels alone
- Review the physical characteristics of the cigar
What Is Now Allowed / Not Allowed
- Allowed
- Applying premium cigar tax rate only when all criteria are met
- Not allowed
- Classifying cigars with filters or tips as premium cigars
- Using packaging claims to determine tax status
Tax Requirement
Cigars with filters, tips, or non-tobacco mouthpieces must be taxed at:
70% of the wholesale price
Effective Date
April 1, 2017
What This Means for Businesses
- You must review cigar products carefully before applying tax rates
- You must apply the correct tax rate based on product characteristics
- You may owe back taxes if products are misclassified
- Penalties and interest may apply after audits or inspections
Important Notes
- All legal definitions must be considered when classifying cigars
- Misapplied tax rates are subject to the full statute period
- Enforcement may occur through inspections and audits
Need Help?
Contact the Field Enforcement Division at 410-260-7388