HB 84: Revenue and taxation; increase tax rate on consumable vapor products

Georgia currently taxes vaping products differently depending on whether they come in a 'closed system' (sealed, prefilled containers, taxed at 5 cents per milliliter) or an 'open system' (refillable devices, taxed at 7 percent of wholesale cost). House Bill 84 eliminates that distinction entirely and taxes all consumable vapor products at a flat 15 percent of wholesale cost. It also raises the tax on vapor devices sold pre-filled and not meant to be reused or refilled from 7 percent to 15 percent of wholesale cost. The bill states that the General Assembly intends for the extra money raised by this rate increase, starting July 1, 2025, to be set aside each year for healthcare issues affecting Georgia residents, and it requires the Department of Revenue to report those amounts to legislative budget leaders on request. A second set of identical changes takes effect December 31, 2029, to align with a scheduled law change on that date. Most of the bill takes effect immediately once signed by the Governor.

• Removes the legal definitions of 'closed system' and 'open system' vapor products from Georgia tax law (O.C.G.A. § 48-11-1), marking both as reserved.
• Eliminates the separate 5 cents per milliliter tax on closed-system vapor products and the 7 percent tax on open-system products, replacing both with one 15 percent tax on the wholesale cost of all consumable vapor products.
• Raises the tax on pre-filled, non-reusable vapor devices from 7 percent to 15 percent of wholesale cost.
• States the legislature's intent that money raised by this tax increase go toward healthcare issues affecting Georgia residents, though it does not create a binding earmark.
• Requires the Department of Revenue to report the increased proceeds to House or Senate Appropriations Committee chairs upon request.
• Repeats the same rate changes in a second version of the law that takes effect December 31, 2029, to match a scheduled statutory update.

Vape shop owners, wholesalers, and manufacturers of vapor products and devices sold in Georgia, who would pay the higher tax; adult vapers who could see higher retail prices passed on; and the Department of Revenue, which must track and report the increased proceeds.

Vapor products would become more expensive to sell and likely to buy in Georgia, since retailers typically pass wholesale tax increases to consumers. The bill signals lawmakers' intent to direct the new revenue toward healthcare programs, though the money is not legally locked to that purpose.

• Section 1 removes the definitions of 'closed system' and 'open system' vapor products from O.C.G.A. § 48-11-1, marking those paragraphs as reserved for future use.
• Section 2 rewrites O.C.G.A. § 48-11-2(a) to tax all consumable vapor products at 15 percent of wholesale cost, replacing the old 5-cent-per-milliliter and 7 percent rates.
• Section 2 also raises the tax on non-refillable, pre-filled vapor devices from 7 percent to 15 percent of wholesale cost.
• Section 2 adds subsection (a.1) expressing legislative intent that proceeds from the tax increase after July 1, 2025 go toward healthcare issues and requires Department of Revenue reporting to Appropriations Committee chairs.
• Section 3 makes identical changes to a version of the tax code that takes effect December 31, 2029.
• Section 4 makes the bill effective upon the Governor's signature, except Section 3, which takes effect December 31, 2029.
• Section 5 repeals conflicting laws.

1. 2025-01-27House Second Readers (Cámara de Representantes)
2. 2025-01-17House First Readers (Cámara de Representantes)
3. 2025-01-16House Hopper (Cámara de Representantes)

• Michelle Au (D, HD-050)Patrocinador principal
• Ron Stephens (R, HD-164)
• Lee Hawkins (R, HD-027)
• Gerald Greene (R, HD-154)
• Debbie Buckner (D, HD-137)

• vaping taxes
• tobacco and vaping law
• excise tax
• healthcare funding
• Georgia tax code