In 2025, Ukraine’s revenues from excise taxes on tobacco and nicotine products increased by 27%, reaching UAH 122.5 billion. At the same time, cigarette consumption decreased by 10%, heated tobacco products (HTPs) by 15%, and cigarillos by 25%. According to NGO “Life,” the reduction in consumption alongside increased state budget revenues became possible due to an effective excise tax policy aligned with Ukraine’s European integration commitments.

Recently, the organization held a press conference dedicated to the results of Ukraine’s tobacco excise policy. During the event, experts analyzed state budget revenues generated by excise tax increases in 2025, as well as revenue losses caused by the introduction of a 25% tax preference for heated tobacco products (HTPs) compared to cigarettes.

Below are the key takeaways from the press conference. The full release is available via the link.

In March 2025, Law No. 4115-IX entered into force, introducing a new schedule for increasing excise rates on cigarettes to EUR 90 per 1,000 units and on HTPs to EUR 72 per 1,000 units by 2028 (a 25% preference). The law also introduced taxation in euros to mitigate the impact of hryvnia depreciation. In 2025, the total excise tax on cigarettes increased by 35%, while for HTPs it rose by 22%.

Under this plan, on January 1, 2026, the excise tax on cigarettes increased to EUR 82 per 1,000 units (+5.13%), while the rate for HTPs rose to EUR 70.8 per 1,000 units (+0.6%).

According to an analysis by the Vienna Institute for International Economic Studies, if urgent measures to further increase tobacco excise taxes are not adopted, tobacco use is likely to resume growth as early as 2026.

“A 5% increase in excise tax on cigarettes and a 0.6% increase on HTPs as of January 1, 2026, will not have a significant impact on the retail price per pack and will not contribute to further reductions in tobacco consumption. Ukraine cannot afford a weak excise policy, as this concerns both state budget revenues and the survival of the nation, whose population is rapidly declining, including due to diseases caused by tobacco and nicotine use,” emphasized Dmytro Kupyra, Program Director of NGO “Life.”

According to NGO “Life” estimates, the excise preference for HTPs cost the Ukrainian budget approximately UAH 3 billion in 2025. In 2026, revenue losses may reach around EUR 88 million (UAH 4.3 billion), and over the period 2025–2028, total shortfalls could amount to EUR 422 million or more than UAH 20 billion.

Data from the Vienna Institute for International Economic Studies indicate that the excise preference for HTPs could lead to 22,485 premature deaths by 2028.

The World Health Organization calls for taxing heated tobacco products at the same level as cigarettes, as independent evidence confirms their significant harm to human health.

Given Ukraine’s strategic goal of EU integration, the critical need to replenish the state budget, and the urgency of addressing the demographic crisis, Ukraine’s tobacco excise increase plan requires revision already now. This would allow timely alignment with European standards and strengthen Ukraine’s economic and social resilience.