- Tobacco excise is the largest price component : $28.06 per 20-pack as of March 2025.
- Excise is indexed twice yearly (1 March, 1 September) using Average Weekly Ordinary Times Earnings (AWOTE).
- On a budget 20-pack, 83% of the price is tax : 73.9% excise plus 9.1% GST.
- From 2013 to 2020, eight rounds of 12.5% above-indexation increases compounded the cost.
- From 1 July 2025, all factory-made cigarette packs standardised to 20 cigarettes.
Quick Answer: Australian cigarettes are among the most expensive in the world because federal excise makes up 60-83% of the retail price, depending on the brand. As of March 2025, the excise on a pack of 20 cigarettes was $28.06. On top of excise, a 10% GST adds roughly 9.1% to the final price. Excise is indexed twice yearly : every 1 March and 1 September : based on changes to average weekly earnings, meaning the tax burden automatically rises faster than inflation.
What makes up the retail price of an Australian cigarette pack?
In March 2025, Tobacco in Australia, Chapter 13.6 “What tobacco taxes apply in Australia?”, reported that the excise payable on a pack of 20 cigarettes was $28.06. GST added 10% at the point of sale, and the retailer margin was estimated at 12.5% of the wholesale price. The remaining value is the manufacturer component. The table below shows how these components break down at different price points, using verified TIA data.
■ GST $3.45
■ Mfr $3.38
■ Retailer $3.06
| Price Component | Budget Pack ($37.95) | Premium Pack ($54.99) |
|---|---|---|
| Excise | $28.06 (73.9%) | $28.06 (51.0%) |
| GST (10%) | $3.45 (9.1%) | $5.00 (9.1%) |
| Total Tax | $31.51 (83.0%) | $33.06 (60.1%) |
| Retailer Margin (~12.5%) | ~$3.06 (8.1%) | ~$6.11 (11.1%) |
| Manufacturer / Importer | ~$3.38 (8.9%) | ~$15.82 (28.8%) |
Source: Tobacco in Australia, Chapter 13.6, Figure 13.6.2, March 2026.
Critically, excise is a flat dollar amount, not a percentage. This means the proportion of tax is highest on the cheapest packs. A budget 20-pack at $37.95 carries 83% tax; a premium 20-pack at $54.99 carries 60.1% tax. The manufacturer keeps roughly $3.38 on the budget pack and $15.82 on the premium pack : a nearly fivefold difference for the same number of cigarettes.
Our observation: At SmokerAU, Melbourne-listed cigarette carton prices for value-focused brands (Manchester, JPS) typically land at $195-$230 per carton of 200 cigarettes, placing them in the supervalue-to-value price segment described by TIA. The excise alone on a 200-cigarette carton was approximately $280.65, meaning the tax exceeds the listed retail price on budget cartons : the manufacturer and retailer absorb the gap.
How does Australia’s tobacco excise indexation mechanism work?
Australia’s tobacco excise is not set at a fixed rate and left alone. Since 2013, Tobacco in Australia, Chapter 13.6 explains, the excise has been indexed twice every year : on 1 March and 1 September : using changes in Average Weekly Ordinary Times Earnings (AWOTE) over the preceding six months. When average wages rise, so does the per-stick excise. This mechanism ensures the tax burden on cigarettes keeps pace with income growth, making cigarettes progressively less affordable over time even without policy changes.
| Date | Indexation | Above-Indexation | Policy Context |
|---|---|---|---|
| 1 Mar (annual) | ✅ AWOTE-based | : | Routine indexation only |
| 1 Sep 2013-2020 | ✅ AWOTE-based | +12.5% | Eight annual scheduled increases |
| 1 Sep 2021-2022 | ✅ AWOTE-based | : | No scheduled above-indexation |
| 1 Sep 2023-2025 | ✅ AWOTE-based | +5% | 2023-24 Federal budget measure |
Source: Tobacco in Australia, Chapter 13.6, March 2026.
The result of this dual-indexation : plus compounding above-indexation increases : is that real cigarette prices have risen dramatically. According to TIA, the real (inflation-adjusted) price of a leading cigarette brand in 2021 was 8.5 times higher than in 1940. Between the April 2010 25% excise increase and the final 12.5% scheduled increase in 2020, the excise on factory-made cigarettes increased 2.8-fold from September 2015 to September 2025.
How much does smoking cost per year in Australia?
| Smoking Habit | Pack Price | Daily Cost | Annual Cost |
|---|---|---|---|
| 1 pack/day (supervalue) | $39.69 | $39.69 | $14,487 |
| 1 pack/day (mainstream) | $54.99 | $54.99 | $20,071 |
| ½ pack/day (10 cigs) | $39.69 | $19.85 | $7,243 |
| ½ pack/day (JPS 20s) | $42.99 | $21.50 | $7,846 |
Average segment prices from TIA Chapter 13.3 (September 2025). Supervalue avg = $39.69, mainstream avg = $54.99, JPS 20s = $42.99. Annual = daily cost × 365.
The excise alone accounts for the bulk of these totals. On a pack-a-day habit at supervalue prices, $10,242 of the annual $14,487 is excise : roughly $28 per day in excise alone. GST adds another ~$1,300. For a mainstream brand smoker, excise is $10,242 of $20,071, or 51% : with GST bringing the total tax share to roughly $12,000 of $20,071.
Why are Australian cigarette prices so much higher than other countries?
Australian cigarette prices are among the highest in the world. The primary reason, according to Tobacco in Australia, Chapter 13.6, is the combination of a high per-unit excise that has been systematically increased through both automatic indexation and deliberate policy increases. The table below illustrates the scale of the policy-driven increases over the last decade.
| Period | Policy Action | Cumulative Effect on Excise |
|---|---|---|
| Apr 2010 | 25% immediate excise increase | +25% overnight |
| 2013-2020 | 8 annual 12.5% increases + indexation | ~160% increase (compounded) |
| Sept 2015-Sept 2025 | Indexation + scheduled increases | 2.8× increase on FMC excise |
| Sept 2023-2025 | 5% above-indexation (2023-24 budget) | +5% above AWOTE each year |
| Jul 2025 | Pack size standardisation (all 20s, all 30g) | Ended large-pack discounting |
Source: Tobacco in Australia, Chapters 13.3 and 13.6.
A second structural factor is the Goods and Services Tax. Unlike in many countries where tobacco excise was reduced when GST was introduced, Australia kept its excise rate intact when the GST came into effect on 1 July 2000. Tobacco in Australia notes this was done at the request of health groups. The result is a cumulative tax stack : excise plus GST : that is higher than in most comparable countries.
A third factor, effective from 1 July 2025, is pack size standardisation. Previously, large packs of 40 or 50 cigarettes offered a lower cost per stick. The new law mandates that all factory-made cigarette packs contain exactly 20 cigarettes and all RYO pouches contain 30 grams, removing the per-stick discount that large packs used to provide.
What is the link between high cigarette prices and the illicit tobacco market?
The same excise structure that makes cigarettes expensive also creates an incentive for illicit trade. Tobacco in Australia devotes an entire section : InDepth 13A “Avoidance and evasion of taxes on tobacco products” : to this issue. The higher the legal price, the larger the gap between taxed and untaxed products. When a legal 20-pack costs $37-$55 and an illicit pack can be sold for $15-$20 by evading excise and GST, the financial incentive for both sellers and buyers is substantial.
Illicit tobacco ranges from smuggled genuine brands to counterfeit products manufactured in unregulated facilities. Tobacco in Australia has documented how organised crime groups exploit the price differential, and Australian Border Force regularly reports seizures of undeclared tobacco at ports and in shipping containers.
The Australian Taxation Office (ATO) and Australian Border Force (ABF) operate the Illicit Tobacco Taskforce to combat this trade. However, Tobacco in Australia cautions that data on the true size of the illicit market is difficult to verify because : by definition : illegal transactions leave no official record.
Frequently Asked Questions
Why does excise make cigarettes so expensive?
Excise is a specific tax per cigarette, not a percentage of the price. As of March 2025, it was $28.06 per 20-pack. This is a fixed amount regardless of whether the pack sells for $38 or $55. On budget brands, excise alone accounts for nearly 74% of the retail price. The excise is also indexed to wages twice yearly, meaning it rises automatically every six months.
How much is the tax on a pack of 20 cigarettes?
On a budget 20-pack priced at $37.95, the total tax was $31.51 : 83% of the retail price (Tobacco in Australia, Chapter 13.6, March 2026). This consists of $28.06 in excise and $3.45 in GST. On a premium pack at $54.99, the total tax was $33.06 : 60.1% of the price.
When does tobacco excise next increase?
Tobacco excise increases automatically on 1 March and 1 September each year, based on the AWOTE index. These are routine indexation events, not policy announcements. The exact amount depends on wage growth in the preceding six months.
How much has cigarette excise increased over the last decade?
According to Tobacco in Australia, Chapter 13.6, the excise on factory-made cigarettes increased 2.8-fold from September 2015 to September 2025. This includes both AWOTE-based indexation and the eight scheduled 12.5% increases (2013-2020) plus the 5% above-indexation increases (2023-2025).
Are roll-your-own cigarettes taxed differently?
Yes. Roll-your-own tobacco is taxed per kilogram using an equivalisation weight that converts loose tobacco into cigarette-equivalent sticks. The equivalisation weight is progressively reducing from 0.7 grams per cigarette to 0.6 grams by September 2026, which raises the effective tax per presumed cigarette. As of March 2025, the excise on a 25-gram RYO pouch was $53.97 (TIA, Chapter 13.6).
What changed with cigarette pack sizes in July 2025?
From 1 July 2025, Australian law standardised all factory-made cigarette packs to 20 cigarettes and all RYO pouches to 30 grams. This ended the practice of large packs (40s, 50s) offering a lower per-stick price, closing one of the few remaining ways for smokers to reduce their per-cigarette cost within the legal market.
Conclusion
Australian cigarettes are expensive because of a deliberate, multi-decade tax policy designed to reduce smoking through price. The core mechanism is a per-stick excise : $28.06 per 20-pack as of March 2025 : that rises automatically with wages twice a year and has been repeatedly increased through above-indexation policy measures. GST, pack size standardisation, and the cumulative effect of compounding increases have pushed the total tax share above 80% on budget brands.
For adult smokers looking to understand and track cigarette prices, our Australian cigarette price tracker monitors listed prices across brands, and our cigarettes category shows current product listings with verified carton prices.
Related Guides
- Tobacco excise Australia explained
- Australia tobacco tax history
- Cheapest cigarette brands in Australia
- Australian cigarette price tracker
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, legal or health advice. Cigarettes are harmful and addictive. For adults 18+ only. If you need help quitting, contact Quitline on 13 78 48 or visit quit.org.au.