- Tobacco excise is a per-stick tax: $28.06 per 20-pack as of March 2025.
- Indexed twice yearly (1 March, 1 September) using Average Weekly Ordinary Times Earnings (AWOTE).
- Excise alone accounts for 73.9% of a budget 20-pack price ($28.06 of $37.95).
- Roll-your-own tobacco is taxed per kilogram using an equivalisation weight that is progressively tightening.
- Since 2016, all tobacco sold in Australia is imported: excise-equivalent customs duty applies, not domestic excise.
Quick Answer: Tobacco excise is a specific tax applied per cigarette, indexed to wages twice a year. As of March 2025, the excise on a pack of 20 factory-made cigarettes was $28.06 (Tobacco in Australia, Chapter 13.6). The rate rises automatically on 1 March and 1 September based on changes in Average Weekly Ordinary Times Earnings. On top of indexation, scheduled above-indexation increases have compounded the rate: 12.5% annually from 2013 to 2020, and 5% annually from 2023 to 2025.
What is Australian tobacco excise and how is it calculated?
Tobacco excise is a consumption tax levied on tobacco products sold in Australia. As Tobacco in Australia, Chapter 13.6 “What tobacco taxes apply in Australia?” explains, excise is calculated on a per-stick basis for factory-made cigarettes and a per-kilogram basis for loose tobacco. Unlike a percentage-based tax such as GST, excise is a flat dollar amount per unit. This means the tax bill is identical whether the pack sells for $38 or $55: what changes is the share of the final price that goes to tax.
Since tobacco product manufacturing ceased in Australia in 2016, all products sold domestically are imported and subject to excise-equivalent customs duty when they cross the border. Throughout Tobacco in Australia and this article, the shorthand term “excise” covers both domestic excise and excise-equivalent customs duty.
| Product Type | Tax Basis | Excise (March 2025) |
|---|---|---|
| Factory-made cigarettes | Per stick | $28.06 per 20-pack |
| Roll-your-own tobacco | Per kg (equivalised to stick count) | $53.97 per 25g pouch |
| Cigars / other tobacco | Per kg (actual weight) | Varies by weight |
Source: Tobacco in Australia, Chapter 13.6, March 2026. RYO excise based on equivalisation weight.
How does the twice-yearly excise indexation work?
Since 2013, Australia’s tobacco excise has been indexed automatically twice per year: on 1 March and 1 September. The indexation factor is determined by changes in Average Weekly Ordinary Times Earnings (AWOTE) over the preceding six months, as reported by the Australian Bureau of Statistics. When average wages rise, the per-stick excise rises proportionally.
This mechanism is separate from any policy-driven increases. Indexation happens regardless of government budgets or announcements. It is built into the Excise Tariff Act and operates automatically. The policy rationale, according to Tobacco in Australia, is to prevent tobacco from becoming more affordable over time as incomes grow.
| Date | Mechanism | Based On |
|---|---|---|
| 1 March | Automatic indexation | AWOTE change (previous Aug-Jan) |
| 1 September | Automatic indexation + any scheduled increases | AWOTE change (previous Feb-Jul) |
Source: Tobacco in Australia, Chapter 13.6, March 2026.
The September indexation has historically been the larger of the two, because it has also been the date for scheduled above-indexation policy increases. From 2013 to 2020, an additional 12.5% was applied each September on top of the AWOTE-based adjustment. From 2023 to 2025, a 5% above-indexation increase applied each September. In 2021 and 2022, only the standard AWOTE indexation applied in September with no additional policy increase.
How is excise different for roll-your-own tobacco?
Roll-your-own (RYO) tobacco is taxed using an equivalisation weight: a formula that converts a kilogram of loose tobacco into an assumed number of cigarette-equivalent sticks. As Tobacco in Australia, Chapter 13.6 explains, this weight has been progressively reduced to align the tax burden between factory-made and roll-your-own products.
| Period | Equivalisation Weight | Effect on RYO Tax |
|---|---|---|
| Before 2017 | 0.8g per cigarette | ~1,250 sticks per kg → lower per-stick tax |
| 2017-2020 | Reduced progressively to 0.7g | ~1,429 sticks per kg → higher per-stick tax |
| 2023-2025 | Reducing from 0.7g to 0.625g | ~1,600 sticks per kg → further increase |
| 1 Sept 2026 | 0.6g per cigarette (target) | ~1,667 sticks per kg → near parity with FMC |
Source: Tobacco in Australia, Chapter 13.6, March 2026.
The effect of lowering the equivalisation weight is to increase the number of assumed cigarettes per kilogram of loose tobacco. At 0.7g, a kilogram is treated as approximately 1,429 cigarettes for tax purposes. At 0.6g, it will be treated as about 1,667 cigarettes. This is a deliberate policy choice to remove the tax advantage that roll-your-own tobacco previously held over factory-made cigarettes.
What have been the major excise policy changes since 2010?
According to Tobacco in Australia, Chapter 13.6, the most significant period of excise reform began with the April 2010 25% immediate increase. This was followed by eight annual 12.5% above-indexation increases from 2013 to 2020, compounded on top of the twice-yearly AWOTE indexation.
2013-20: +12.5%/yr ×8
2023-25: +5%/yr ×3
Ongoing: AWOTE indexation
The combined effect of these policy measures has been dramatic. From September 2015 to September 2025, the excise on factory-made cigarettes increased 2.8-fold. The real (inflation-adjusted) price of a leading cigarette brand in 2021 was 8.5 times higher than in 1940.
The 2023-24 Federal Budget introduced two further changes: a 5% annual above-indexation increase for three years (September 2023 to September 2025), and the progressive reduction of the RYO equivalisation weight from 0.7 grams to 0.6 grams by September 2026.
How much excise is actually in a pack of cigarettes?
| Pack Type | Retail Price | Excise Amount | Excise as % of Price |
|---|---|---|---|
| Budget 20-pack | $37.95 | $28.06 | 73.9% |
| Supervalue 20-pack (avg) | $39.69 | $28.06 | 70.7% |
| Mainstream 20-pack (avg) | $54.99 | $28.06 | 51.0% |
| Premium 20-pack (avg) | $60.72 | $28.06 | 46.2% |
Excise: $28.06 per 20-pack (March 2025). Price data from TIA Chapter 13.3 (September 2025). Premium % calculated from average price.
Because excise is a flat dollar amount, its share of the final price falls as the retail price rises. The excise per pack is identical across all 20-pack brands: $28.06. What changes is how much the manufacturer and retailer add on top. This is why budget brands carry the highest tax burden as a percentage of price.
Frequently Asked Questions
What is the current tobacco excise rate in Australia?
As of March 2025, the excise payable on a pack of 20 factory-made cigarettes was $28.06. For a 25-gram pouch of roll-your-own tobacco, excise was $53.97 (Tobacco in Australia, Chapter 13.6, March 2026). The rate is indexed twice yearly and may have changed since these figures were published.
How is tobacco excise different from GST?
Excise is a fixed dollar amount per cigarette ($28.06 per 20-pack). GST is a 10% tax applied to the final retail price at the point of sale. Excise is collected at the border when products are imported; GST is collected at the register. On a $37.95 budget pack, excise is $28.06 and GST is $3.45. The two taxes together account for 83% of the price.
When does tobacco excise increase in Australia?
Automatically on 1 March and 1 September each year, based on changes to Average Weekly Ordinary Times Earnings. These are routine indexation events. Policy-driven above-indexation increases (such as the 5% from 2023-2025) require new legislation or budget measures.
Why is roll-your-own tobacco taxed differently from factory-made cigarettes?
RYO tobacco is sold by weight, not by stick count, so it is taxed per kilogram using an equivalisation formula. The government has been progressively reducing the assumed grams-per-cigarette from 0.8g to a target of 0.6g by September 2026, which increases the effective per-stick tax on loose tobacco and brings it closer to parity with factory-made cigarettes.
Where does tobacco excise revenue go?
Tobacco excise revenue is collected by the Australian Taxation Office and goes into general government revenue. It is not hypothecated (ring-fenced) for health programs, though health groups have long advocated for a portion to be directed to smoking cessation and tobacco control. Tobacco in Australia, Chapter 13.7, covers revenue data in detail.
Conclusion
Australian tobacco excise is a deliberately designed, multi-layered tax system that applies a fixed dollar amount per cigarette stick, indexes it to wages twice a year, and has been repeatedly increased through above-indexation policy measures. The result is that excise alone can make up 47% to 74% of a pack’s retail price, depending on the brand segment.
For adult smokers wanting to understand the real-world effect on prices, see our why cigarettes are so expensive guide and Australian cigarette price tracker.
Related Guides
- Why are cigarettes so expensive in Australia?
- Australia tobacco tax history
- 20-pack vs 25-pack vs 30-pack cigarette cost
Sources
- Tobacco in Australia, Chapter 13.6 “What tobacco taxes apply in Australia?”, Bayly M and Scollo MM, Cancer Council Victoria, last updated March 2026. https://www.tobaccoinaustralia.org.au/chapter-13-taxation/13-6-what-tobacco-taxes-apply-in-australia
- Tobacco in Australia, Chapter 13.3 “How much do tobacco products cost in Australia?”, Bayly M and Scollo MM, Cancer Council Victoria, last updated December 2025. https://www.tobaccoinaustralia.org.au/chapter-13-taxation/13-3-how-much-do-tobacco-products-cost-in-australia
Article by davidhe, Product Specialist at SmokerAU. Published June 2026. Last reviewed 28 June 2026.
Disclaimer: This article is for informational purposes only and does not constitute tax or legal advice. Cigarettes are harmful and addictive. For adults 18+ only.