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Kim Reynolds
governor
Office of the Governor Chris Cournoyer
LT GOVERNOR
May 26, 2026
The Honorable Paul Pate
Secretary of State of Iowa
State Capitol
Des Moines, Iowa 50319
Dear Mr. Secretary,
I hereby transmit:
Senate File 2480, an Act relating to the taxation and regulation of alternative nicotine
products and vapor products, making appropriations, and including effective date
provisions.
The above Senate File is hereby approved on this date.
Governor of Iowa
cc: Secretary of the Senate
Clerk of the House
STATE CAPITOL DES MOINES, IOWA 50319 515.281.5211 WWW.GOVERNOR.IOWA:GOV
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Senate File 2480
AN ACT
RELATING TO THE TAXATION AND REGULATION OF ALTERNATIVE NICOTINE
PRODUCTS AND VAPOR PRODUCTS, MAKING APPROPRIATIONS, AND
INCLUDING EFFECTIVE DATE PROVISIONS.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
Section 1. Section 453A.1, subsections 1 and 29, Code 2026,
are amended to read as follows:
1. "Alternative nicotine product" means a product, not
consisting of or containing tobacco, that provides for the
ingestion into the body of nicotine, or a nicotine analog,
whether by chewing, absorbing, dissolving, inhaling, snorting,
or sniffing, or by any other means. "Al ternati ve nicotine
product" does not include cigarettes, tobacco products, or vapor
products, or a product that is regulated as a drug or device by
the United States food and drug administration under chapter V
of the Federal Food, Drug, and Cosmetic Act.
29. a. "Vapor product" means any noncombustible product,
which may or may not contain nicotine or a nicotine analog ,
that employs a heating element, power source, electronic
circuit, or other electronic, chemical, or mechanical means,
regardless of shape or size, that can be used to produce vapor
from a solution or other substance. "Vapor product" includes an
but is not limited to the following:
(1) Any product or device marketed, manufactured,
distributed, or sold as an electronic cigarette, electronic
cigar, electronic cigarillo, electronic pipe, or similar
Senate File 2480, p. 2
product or device , and any^
( 2 ) Any cartridge or other container of a solution or other
substance, which may or may not contain nicotine or a nicotine
analog , that is intended to be used with or in an electronic
cigarette, electronic cigar, electronic cigarillo, electronic
pipe, or similar product or device.
(3) Any component, part, or accessory of such a product
or device that is used during the operation of the product or
device when sold in combination with any substance containing
nicotine, a nicotine analog, tobacco, or tobacco derivative.
b. '''Vapor product" does not include a any of the following:
(1) A product regulated as a drug or device by the United
States food and drug administration under chapter V of the
Federal Food, Drug, and Cosmetic Act.
(2) Any component, part, or accessory of such a product
or device that is used during the operation of the product
or device when not sold in combination with any substance
containing nicotine, a nicotine analog, tobacco, or tobacco
derivative.
Sec. 2. Section 453A.1, Code 2026, is amended by adding the
following new subsection:
NEW SUBSECTION . 18A. 'Nicotine analog" means a substance
that has a chemical structure that is substantially similar to
nicotine, or that has an effect on the central nervous system
that is substantially similar to, or greater than, the effects
of nicotine on the central nervous system.
Sec. 3. Section 453A.35A, subsection 1, Code 2026, is
amended to read as follows:
1. a. A health care trust fund is created in the office
of the treasurer of state. The fund consists of the revenues
generated from the tax on cigarettes pursuant to section
453A.6, subsection 1, from the tax on tobacco products as
specified in section 453A.43, subsections 1, 2, 3, and 4,
from the additional taxes on alternative nicotine and vapor
products pursuant to section 453A.43A, and from the fees and
penalties specified in subchapter III, that are credited to
the health care trust fund, annually, pursuant to section
453A.35. Moneys in the fund shall be separate from the
general fund of the state and shall not be considered part of
Senate File 2480, p. 3
the general fund of the state. Mon e ys Except as otherwise
provided, moneys in the fund shall be used only as specified
in this section and shall be appropriated only for the uses
specified. Moneys in the fund are not subject to section 8.33
and shall not be transferred, used, obligated, appropriated,
or otherwise encumbered, except as provided in this section.
Notwithstanding section 12C.7, subsection 2, interest or
earnings on moneys deposited in the fund shall be credited to
the fund.
b. (1) For the fiscal year beginning July 1, 2027, and
each fiscal year thereafter, the first three million dollars
from the amount of tax collected that is attributable to the
additional taxes on alternative nicotine products and vapor
products pursuant to section 453A.43A is appropriated from
the health care trust fund to the state board of regents for
the purpose of conducting pediatric cancer research, clinical
therapy access, and providing physician-scientist leadership at
the state university of Iowa stead family children's hospital.
(2) By December 1, 2028, and each December 1 thereafter,
the state board of regents shall submit a report to the general
assembly describing the research programs initiated or advanced
as a result of the appropriations made to the hospital, the
number of patients served, including patients enrolled in
clinical trials or therapy, and any outcomes to the extent
available, on the efficacy of the funded programs, trials, or
therapies.
Sec. 4. Section 453A.40, subsections 1 and 3, Code 2026, are
amended to read as follows:
1. All persons required to obtain a permit or to be licensed
under section 453A.13 or section 453A.44 having in their
possession and held for resale on the effective date of an
increase in the tax rate cigarettes, little cigars, ef tobacco
products , alternative nicotine products, or vapor products upon
which the tax under section 453A.6 X er- 453A.43 , or 453A.43A
has been paid, unused cigarette tax stamps which have been
paid for under section 453A.8, unused metered imprints which
have been paid for under section 453A.12, or tobacco products^.
alternative nicotine products, or vapor products for which the
tax has not been paid under section 453A.46 shall be subject to
Senate File 2480, P* 4
an inventory tax on the items as provided in this section.
3. The rate of the inventory tax on each item subject to
the tax as specified in subsection 1 is equal to the difference
between the amount paid on each item under section 453A.6,
453A.8, 453A.12, 453A.43 , or 453A.43A prior to the tax
increase and the amount that is to be paid on each similar item
under section 453A.6, 453A.8, 453A.12, er- 453A. 43 , or 453A.43A
after the tax increase except that in computing the rate of the
inventory tax any discount allowed or allowable under section
453A.8 shall not be considered.
Sec. 5. Section 453A.42, subsections 5, 7, 15, and 18, Code
2026, are amended to read as follows:
5. '"'Distributor" means any and each of the following:
a. Any person engaged in the business of selling tobacco
product s , alternative nicotine products, or vapor products
in this state who brings, or causes to be brought, into this
state from without the state any tobacco products , alternative
nicotine products, or vapor products for sale-r^
b. Any person who makes, manufactures, or fabricates tobacco
product s , alternative nicotine products, or vapor products i n
this state for sale in this state-r^
c. Any person engaged in the business of selling tobacco
product s , alternative nicotine products, or vapor products
without this state who ships or transports tobacco products^
alternative nicotine products, or vapor products to retailers
in this state, to be sold by those retailers.
7. "Manufacturer" means a person who manufactures and sells
tobacco product s , alternative nicotine products, or vapor
products .
15. "Sub jobber" means any person, other than a manufacturer
or distributor, who buys tobacco products , alternative nicotine
products, or vapor products from a distributor and sells them
to persons other than the ultimate consumers.
18. "Wholesale sales price" means the established price
for which a manufacturer sells a tobacco product , alternative
nicotine product, or vapor product to a distributor, exclusive
of any discount or other reduction.
Sec. 6. NEW SECTION . 453A.43A Additional taxes on
alternative nicotine and vapor products.
Senate File 2480, p. 5
1. a. (1) A tax is imposed upon all alternative nicotine
products and all vapor products in this state and upon any
person engaged as a distributor of alternative nicotine
products and vapor products, at the following rates:
(a) On alternative nicotine products, five cents per
container containing up to twenty units, and a proportionate
tax at the same rate on each unit in excess of twenty units.
(b) On vapor products, five cents per milliliter of a
solution containing nicotine or a nicotine analog and a
proportionate tax at the same rate on any fractions of a
milliliter .
(2) The tax imposed pursuant to subparagraph (1) shall be
imposed based on the net volume of the solution as listed by
the manufacturer.
b. The tax on alternative nicotine products and vapor
products shall be imposed at the time the distributor does any
of the following:
(1) Brings, or causes to be brought, into this state from
outside the state alternative nicotine products or vapor
products for sale.
(2) Makes, manufactures, or fabricates alternative nicotine
products or vapor products in this state for sale in this
state.
(3) Ships or transports alternative nicotine products or
vapor products to retailers in this state, to be sold by the
retailers .
2. A tax is imposed upon the use or storage of alternative
nicotine products or vapor products in this state, and upon
any person who uses or stores alternative nicotine products
or vapor products, at the following rates, if the tax imposed
under subsection 1 has not been paid:
a. (1) On alternative nicotine products, five cents per
container containing up to twenty units, and a proportionate
tax at the same rate on each unit in excess of twenty units.
(2) On vapor products, five cents per milliliter of a
solution containing nicotine or a nicotine analog and a
proportionate tax at the same rate on any fractions of a
milliliter .
b. The tax imposed pursuant to paragraph "a" shall be
Senate File 2480, p. 6
imposed based on the net volume of the solution as listed by
the manufacturer.
3. Any alternative nicotine product or vapor product
with respect to which a tax has once been imposed under
this subchapter shall not again be subject to tax under this
subchapter .
4. The tax imposed by this section shall not apply with
respect to any alternative nicotine product or vapor product
which under the constitution and laws of the United States may
not be made the subject of taxation by this state.
5. The tax imposed by this section shall be in addition to
any other taxes imposed by law.
6. All excise taxes collected under this section by any
person are deemed to be held in trust for the state of Iowa.
Sec. 7. Section 453A.44, subsections 1, 3, and 10, Code
2026, are amended to read as follows:
1. Ne A person shall not engage in the business of a
distributor or subjobber of tobacco products at any place of
business without first having received a license from the
director to engage in that business at that place of business.
3. A person without this state who ships or transports
tobacco product s , alternative nicotine products, or vapor
products to retailers in this state, to be sold by those
retailers, may make application for a license as a distributor,
be granted a license by the director, and thereafter be subject
to all the provisions of this subchapter and entitled to act as
a licensed distributor.
10. The director may revoke, cancel, or suspend the
license or licenses of any distributor or subjobber for
violation of any of the provisions of this subchapter, or
any other act applicable to the sale of tobacco products,
alternative nicotine products, or vapor products, or any rule
or regulations promulgated by the director in furtherance of
this subchapter. Ne A license shall not be revoked, canceled,
or suspended except after notice and a hearing by the director
as provided in section 453A.48.
Sec. 8. Section 453A.45, Code 2026, is amended to read as
follows :
453A.45 Licensees, duties.
Senate File 2480, p. 7
1. a. Every distributor shall keep at each licensed
place of business complete and accurate records for that
place of business, including itemized invoices, of tobacco
product s , alternative nicotine products, or vapor products
held, purchased, manufactured, brought in or caused to be
brought in from without the state, or shipped or transported to
retailers in this state, and of all sales of tobacco products^
alternative nicotine products, or vapor products made , except
sales to the ultimate consumer.
b. When a licensed distributor sells tobacco products^
alternative nicotine products, or vapor products exclusively to
the ultimate consumer at the address given in the license, an
invoice of those sales is not required, but itemized invoices
shall be made of all tobacco products , alternative nicotine
products, or vapor products transferred to other retail
outlets owned or controlled by that licensed distributor. All
books, records, and other papers and documents required by
this subsection to be kept shall be preserved for a period
of at least three years after the date of the documents or
the date of the entries appearing in the records, unless the
director, in writing, authorized their destruction or disposal
at an earlier date. At any time during usual business hours,
the director, or the director's duly authorized agents or
employees, may enter any place of business of a distributor,
without a search warrant, and inspect the premises, the records
required to be kept under this subsection, and the tobacco
products , alternative nicotine products, or vapor products
contained therein, to determine if all the provisions of this
subchapter are being fully complied with. If the director,
or any such agent or employee, is denied free access or is
hindered or interfered with in making the examination, the
license of the distributor at that premises is subject to
revocation by the director.
2. Every person who sells tobacco products , alternative
nicotine products, or vapor products to persons other than the
ultimate consumer shall render with each sale itemized invoices
showing the seller's name and address, the purchaser's name and
address, the date of sale, and all prices and discounts. The
person shall preserve legible copies of all these invoices for
Senate File 2480, p. 8
three years from the date of sale.
3. Every retailer and sub jobber shall procure itemized
invoices of all tobacco products , alternative nicotine
products, or vapor products purchased. The invoices shall show
the name and address of the seller and the date of purchase.
The retailer and subjobber shall preserve a legible copy
of each invoice for three years from the date of purchase.
Invoices shall be available for inspection by the director or
the director's authorized agents or employees at the retailer's
or subjobber's place of business.
4. Records of all deliveries or shipments of tobacco
products , alternative nicotine products, or vapor products from
any public warehouse of first destination in this state which
is subject to the provisions of and licensed under chapter
554 shall be kept by the warehouse and be available to the
director for inspection. Th e y The records shall show the name
and address of the consignee, the date, the quantity of tobacco
products , alternative nicotine products, or vapor products
delivered, and such other information as the commissioner may
require. Titese The records shall be preserved for three years
from the date of delivery of the tobacco products , alternative
nicotine products, or vapor products .
5. a. The transportation of tobacco products , alternative
nicotine products, or vapor products into this state by means
other than common carrier must be reported to the director
within thirty days with the following exceptions:
(1) The transportation of not more than fifty cigars, not
more than ten ounces of snuff or snuff powder, or not more
than one pound of smoking or chewing tobacco or other tobacco
products not specifically mentioned herein;
(2) Transportation by a person with a place of business
outside the state, who is licensed as a distributor under
section 453A.44, or tobacco products , alternative nicotine
products, or vapor products sold by such person to a retailer
in this state.
b. The report shall be made on forms provided by the
director. A report required under this subsection shall be
filed electronically. A report required to be submitted
electronically under this subsection that is filed in a manner
Senate File 2480, p. 9
other than in an electronic format specified by the department
shall not be considered a valid submission unless the director
has permitted the submission of such a report through an
alternative method pursuant to section 453A.57.
c. Common carriers transporting tobacco products,
alternative nicotine products, or vapor products into this
state shall file with the director reports of all such
shipments other than those which are delivered to public
warehouses of first destination in this state which are
licensed under the provisions of chapter 554. Such reports
shall be filed electronically with the department on or before
the tenth day of each month and shall show with respect to
deliveries made in the preceding month all of the following:
(1) The date.
(2) The point of origin.
(3) The point of delivery.
(4) The name of the consignee.
(5) A description and the quantity of tobacco products^
alternative nicotine products, or vapor products delivered.
(6) Such other information as the director may require.
d. Any person who fails or refuses to transmit to the
director the required reports or whoever refuses to permit the
examination of the records by the director shall be guilty
of a serious misdemeanor. In addition, any person who fails
to timely submit a report required under this section is
subject to a penalty in the amount of fifty dollars for each
occurrence .
Sec. 9. Section 453A.46, subsection 1, paragraph a,
subparagraph (1), Code 2026, is amended to read as follows:
(1) On or before the twentieth day of each calendar month
every distributor with a place of business in this state shall
file a return with the director showing for the preceding
calendar month the quantity and wholesale sales price of
each tobacco product , alternative nicotine product, or vapor
product brought, or caused to be brought, into this state for
sale; made, manufactured, or fabricated in this state for sale
in this state; and any other information the director may
require. Every licensed distributor outside this state shall
in like manner file a return with the director showing for the
Senate File 2480, p. 10
preceding calendar month the quantity and wholesale sales price
of each tobacco product , alternative nicotine product, or vapor
product shipped or transported to retailers in this state to be
sold by those retailers and any other information the director
may require. Returns shall be made upon forms made available
in electronic form and prescribed by the director and shall
contain other information as the director may require. Each
return shall be accompanied by a remittance for the full tax
liability shown on the return, less a discount as fixed by the
director not to exceed five percent of the tax. Within three
years after the return is filed or within three years after the
return became due, whichever is later, the department shall
examine it, determine the correct amount of tax, and assess the
tax against the taxpayer for any deficiency. The period for
examination and determination of the correct amount of tax is
unlimited in the case of a false or fraudulent return made with
the intent to evade tax, or in the case of a failure to file a
return .
Sec. 10. Section 453A.46, subsection 6, Code 2026, is
amended to read as follows:
6. On or before the twentieth day of each calendar month,
every consumer who, during the preceding calendar month,
has acquired title to or possession of tobacco products^
alternative nicotine products, or vapor products for use or
storage in this state, and upon which tobacco products the
-fea* taxes imposed by section 453A.43 baa or 453A.43A have not
been paid, shall file a return with the director showing the
quantity of tobacco products , alternative nicotine products,
or vapor products so acquired. The return shall be made upon
a form furnished and prescribed by the director, and shall
contain other information as the director may require. The
return shall be accompanied by a remittance for the full unpaid
tax liability shown by it. Within three years after the return
is filed or within three years after the return became due,
whichever is later, the department shall examine it, determine
the correct amount of tax, and assess the tax against the
taxpayer for any deficiency. The period for examination and
determination of the correct amount of tax is unlimited in the
case of a false or fraudulent return made with the intent to
Senate File 2480, p. 11
evade tax, or in the case of a failure to file a return.
Sec. 11. Section 453A.47, Code 2026, is amended to read as
follows :
453A.47 Refunds, credits.
Where tobacco products , alternative nicotine products, or
vapor products upon which the tax imposed by this subchapter
has been reported and paid are shipped or transported by the
distributor to consumers to be consumed without the state or
to retailers or subjobbers without the state to be sold by
those retailers or subjobbers without the state or are returned
to the manufacturer by the distributor or destroyed by the
distributor, refund of such tax or credit may be made to the
distributor in accordance with regulations prescribed by the
director. Any overpayment of the tax imposed under section
453A.43 or 453A.43A may be made to the taxpayer in accordance
with regulations prescribed by the director. The director
shall cause any such refund of tax to be paid out of the general
fund of the state, and so much of said fund as may be necessary
is hereby appropriated for that purpose.
Sec. 12. Section 453A.47C, subsections 3 and 4, Code 2026,
are amended to read as follows:
3. A retailer required to possess or possessing a permit
under section 453A.13 or 453A.47A to make delivery sales
of alternative nicotine products or vapor products within
this state shall be deemed to have waived all claims that
such retailer lacks physical presence within this state for
purposes of collecting and remitting sales and use tax and the
additional tax provided in section 453A.43A .
4. A retailer making taxable delivery sales of alternative
nicotine products or vapor products within this state shall
remit to the department all sales and use tax due on such sales
at the times and in the manner provided by chapter 423 , and
remit the additional tax as provided in section 453A.43A .
Sec. 13. Section 453A.48, subsection 3, Code 2026, is
amended to read as follows:
3. The director may exchange information with the officers
and agencies of other states administering laws relating to the
taxation of tobacco products , alternative nicotine products,
and vapor products .
Senate File 2480, p. 12
See. 14. EFFECTIVE DATE. This
2027
AMY SINCLAIR
President of the Senate
Act takes effect January 1,
_
PAT GRASSLEY ll
Speaker of the House
I hereby certify that this bill originated in the Senate and
is known as Senate File 2480, Ninety-first General Assembly.
WllAÄfe _ W. CHARLES SMITHSON
Approved
Secretary o^the Senate
KjAA. / KIM REYNOLDS /
• Governor