State Policy · SC
South Carolina Enacts Vape Tax to Offset Medicaid Tobacco Revenue Decline
South Carolina enacted legislation taxing vapes with revenue directed to Medicaid to compensate for declining cigarette tax collections. The law takes effect in October 2026. Governor Henry McMaster signed the measure two weeks ago. The legislation addresses a budget gap facing South Carolina Medicaid as smoking rates decline and traditional tobacco tax revenue decreases, while simultaneously reducing taxes on electronic cigarettes that contain tobacco.
Why it mattersSouth Carolina Medicaid managed care organizations should monitor state budget dynamics as this tax structure affects program funding stability and may signal broader state fiscal pressures on Medicaid appropriations.