Lansing, Feb 18: Gretchen Whitmer has proposed a series of new and increased taxes on tobacco products, vaping items and online gambling as part of her Fiscal Year 2027 budget, aiming to generate additional revenue to help safeguard Medicaid funding in the state.
The proposal, which requires approval from the Michigan Legislature before taking effect, seeks to raise the state’s cigarette tax by USD 1 per pack — from USD 2 to USD 3. Taxes on other tobacco products, including cigars and smokeless tobacco, would increase from 32 per cent to 57 per cent of the wholesale price.
The budget also introduces a new excise tax equal to 57 per cent of the wholesale price on vaping devices and other alternative nicotine products that are not traditional tobacco.
According to the Whitmer administration, the tax changes are intended to “generate revenue to help safeguard Medicaid funding” and to “bring in additional revenue while discouraging tobacco and nicotine use.”
In addition to tobacco-related measures, the proposal targets online gambling and sports betting operators. It calls for a per-wager fee of 25 cents per bet for a sportsbook’s first 20 million wagers annually, rising to 50 cents per bet thereafter.
The plan would also eliminate the ability of sportsbooks to deduct promotional “free play” credits from their taxable revenue. For internet gaming platforms, the proposal seeks to increase taxes on the largest online casino operators by raising the top-tier rate to 36 per cent.
The administration described the measures as “part of a broader strategy to generate new revenue and help protect funding for Medicaid,” the public health insurance programme that serves low-income residents.
If approved by lawmakers, the changes would represent “a significant shift in how Michigan taxes tobacco, nicotine alternatives and online gambling,” according to the administration.
