How Consumption Is Affected by Higher Taxes on E-Cigarettes and Regular Cigarettes

A new U.S. study published in Focus (Reddy et al., 2025) shows that higher taxes on e-cigarettes and traditional cigarettes can have different effects on how people use these products. The researchers used advanced data models to forecast developments over five years, and the results provide important guidance for future public health policy.

E-cigarettes have become especially popular among teenagers and young adults in the United States. In fact, more young people today use e-cigarettes than traditional cigarettes. At the same time, some research indicates that e-cigarettes may help adult smokers quit smoking regular cigarettes. This makes the tax issue complicated: should taxes be raised to prevent youth from starting—or does that risk discouraging adults from switching to a less harmful alternative?

The researchers used a simulation model that followed a virtual population of teens, young adults, and adults over a five-year period. They tested three different scenarios:

•    Higher tax on cigarettes
•    Higher tax on e-cigarettes
•    Higher tax on both products

The results can be summarized in three points:

•    Higher cigarette taxes reduced smoking, especially among young adults. However, e-cigarette use increased slightly.
•    Higher e-cigarette taxes significantly reduced e-cigarette use, particularly among youth, but did not lead to a major increase in cigarette smoking.
•    A combined tax on both products had the greatest overall effect—both smoking and e-cigarette use declined.

The study suggests that a combined tax on both cigarettes and e-cigarettes may provide the greatest public health benefits. In this way, policymakers could reduce youth e-cigarette use while continuing to push smoking rates down.

However, the researchers emphasize that young adults are the most uncertain group in the models, as their habits change quickly. Therefore, continued research is needed to better understand how they are affected by tax changes.