$31.05 excise on a 20 pack: Australia 2026 ATO rates and legal buys

From 1 September 2026, the excise on factory-made cigarettes rose to $1.55274 per stick, while loose tobacco outside stick form now attracts $2,587.90 per kilogram, according to the Australian Taxation Office. The jump comes from twice-yearly wage indexation plus the final stage of a roll-your-own tobacco change. For a pack of 20, that means a higher shelf price on top of GST and retailer margin, whether you buy in a shop or look for cheap cigarette online deals.

TL;DR:

The excise rate on cigarettes will rise to $1.55274 per stick from September 2026, significantly increasing the retail price before GST and margins.

The final adjustment to roll-your-own tobacco measurement has shrunk the equivalisation weight to 0.6 grams per stick, boosting duty calculations for loose tobacco.

Despite steady excise increases, revenue forecasts for 2026-2027 are down by roughly $1.32 billion, partly due to rising illegal tobacco sales.

Retailers are likely to respond with more promotions and pack-size variations to mitigate the impact of higher excise costs.

Consumers should budget ahead, verify retailer licensing, and compare the costs of loose versus factory-made tobacco, as the price gap narrows after the new measurement adjustment.

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What changed in 2026: ATO rates, indexation mechanics and RYO equivalisation
How the excise change affects retail prices and affordability
Policy debate in 2026: Senate inquiry, parliamentary analysis and the illicit tobacco bill
Practical steps for smokers: legal limits, compliance and budgeting after the increase
Publisher product snapshot: comparing lawful tobacco options for smokers
Comparison of Australia’s tobacco excise rates with other countries
Projected impact on government tax revenue from the 2026 excise increase
Market outlook: what retailers and smokers do next
Browse lawful, competitively priced tobacco at Cigarette Central
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FAQ

What changed in 2026: ATO rates, indexation mechanics and RYO equivalisation

The excise rate on tobacco sticks weighing 0.8 grams or less climbed from $1.52829 to $1.55274 per stick from 1 September 2026, and the rate for tobacco not in stick form (loose or roll-your-own) rose from $2,445.26 to $2,587.90 per kilogram, according to the ATO’s excise duty rates. Both increases came from the same indexation factor: 1.016, based on Average Weekly Ordinary Time Earnings, or AWOTE.

AWOTE indexation isn’t new. The ATO’s legal guidance confirms the Australian Bureau of Statistics publishes AWOTE figures twice a year, and tobacco excise adjusts every March and September to match wage growth. New rates then appear in the Commonwealth Gazette and on the ATO’s working tariff, so retailers and importers have a fixed, published number to work from rather than a moving target.

What made September 2026 different was a second, separate change layered on top of wage indexation: the completion of a multi-year adjustment to how roll-your-own tobacco is measured for tax purposes.

The equivalisation weight used to convert loose tobacco into an “equivalent number of cigarette sticks” for duty purposes has been shrinking in stages since 2023.
It started at 0.7 grams per stick and dropped in steps to 0.6 grams, with the final stage locked in on 1 September 2026, per the ATO.
A smaller equivalisation weight means more “sticks” are calculated out of the same kilogram of loose tobacco, so the effective per-kilogram duty burden increases even without touching the headline rate.
This closes a long-standing price gap that made RYO tobacco noticeably cheaper per cigarette than factory-made packs.

For years, rolling your own was the budget move for smokers watching their spending. The equivalisation change doesn’t eliminate that gap outright, but it narrows it, and that shift matters if you’re deciding between a pouch of loose tobacco and a pre-made pack. Our breakdown of loose tobacco pricing walks through what the new equivalisation weight means in cost-per-gram terms.

Every rate change also has to be validated through tariff proposals moved in Parliament, which is why you’ll sometimes see “proposed” rates ahead of an effective date before they’re formally confirmed. By the time a rate takes effect, it’s already been through that legislative process.

How the excise change affects retail prices and affordability

Excise is only one part of what you pay at the till, but it’s the biggest single line item. Multiply the per-stick rate by 20 and you get the excise component alone on a standard pack, before GST and before the retailer’s margin get added on top.

$1.55274 per stick works out to roughly $31.05 in excise duty alone on a 20-pack, based on the ATO’s published rate effective from 1 September 2026. That’s before the 10% GST applies to the final retail price, and before any margin a retailer builds in.

To illustrate, say a retailer sets a pre-GST retail price that covers the $31.05 excise plus wholesale costs and a margin, landing at $38. Add 10% GST and the shelf price comes to roughly $42. That’s an illustrative figure built from stated assumptions, not an official price, because actual shelf prices vary by brand, retailer and location.

Excise is calculated per stick or per kilogram, not as a percentage of price, so it rises independently of what a brand charges.
GST of 10% applies to the final retail price, compounding on top of excise rather than sitting alongside it.
Retailer margin and wholesale costs are the remaining variables, which is why identical packs can differ in price between outlets.

Tobacco excise has climbed steadily since 2010, when successive governments began using regular increases as a deliberate tool to reduce smoking rates. That long run of increases has pushed Australia’s cigarette prices among the highest in the world, a point worth understanding before you assume today’s price is simply “high” rather than the product of fifteen-plus years of compounding rate rises.

For a full walkthrough of how the 2026 rate translates into pack-level numbers, see our explainer on the 2026 tobacco tax change.

How the excise change affects retail prices and affordability — overview diagram

Policy debate in 2026: Senate inquiry, parliamentary analysis and the illicit tobacco bill

Not everyone in Canberra agrees that another excise rise was the right call, and the disagreement isn’t just political noise. It’s showing up in committee reports and legislative responses.

A Senate inquiry into the illegal tobacco crisis, reporting in August 2026, recommended pausing further excise increases, including routine indexation, until the illicit tobacco market is more effectively brought under control. The committee’s concern is straightforward: if legal cigarettes keep getting more expensive while illegal ones stay cheap and available, more smokers simply switch supply rather than quit.

The Parliamentary Library’s Issues and Insights analysis, published in February 2026, backs part of that concern with numbers. It describes excise as one of the most cost-effective single tools for reducing smoking prevalence, but notes the approach may be hitting diminishing returns, with revenue forecasts for 2026 to 2027 revised down by roughly $1.32 billion compared to earlier modelling. The analysis is careful not to claim a direct cause-and-effect link to illicit trade, but it flags the revenue shortfall and rising enforcement activity as signals worth watching rather than proof of a single cause.

The Senate committee recommended a pause on further increases until illicit tobacco is meaningfully addressed.
The Parliamentary Library flagged a revenue downgrade of about $1.32 billion for 2026 to 2027 against earlier projections.
The Combatting Illicit Tobacco Bill 2026 proposes stronger criminal and civil penalties, expanded enforcement powers and higher thresholds targeting importation, manufacture and supply of illegal product, according to a parliamentary briefing digest.

That price gap is part of why the bill leans so heavily on enforcement rather than further tax changes: legal packs of 20 in Australia typically cost over $40, while illicit packs can sell for as little as $10, a gap wide enough to sustain a black market almost by itself.

Pro Tip: If you’re comparing prices anywhere, check whether a retailer displays a valid Australian business number and clear compliance information before you buy, since that’s a quick first filter against unlicensed sellers.

Policy debate in 2026: Senate inquiry, parliamentary analysis and the illicit tobacco bill — overview diagram

Practical steps for smokers: legal limits, compliance and budgeting after the increase

Staying on the right side of the law and keeping costs manageable both come down to a handful of habits.

Know the duty-free limit. Travellers bringing tobacco into Australia face strict duty-free allowances, and exceeding them without declaring can mean paying duty on the spot or having product seized. Our guide to the 25-cigarette duty-free limit breaks down what’s allowed and what isn’t.
Recalculate your monthly spend. If you smoke a pack a day, work out your new monthly cost using the current per-stick excise plus GST and compare it against last year’s figure, so the increase isn’t a surprise on your bank statement.
Weigh pack versus loose tobacco. With the equivalisation weight now at 0.6 grams, the cost gap between RYO and factory-made cigarettes has narrowed, so it’s worth redoing that comparison rather than assuming RYO is automatically cheaper.
Buy from compliant retailers only. Confirm any online or bricks-and-mortar seller is operating lawfully; the ATO publishes guidance on excise-paid product and licensed dealers, which is a useful check before handing over payment details.
Budget in advance for the next indexation date. Because rates adjust every March and September, building a small buffer into your budget twice a year avoids the shock of a sudden price jump.

Publisher product snapshot: comparing lawful tobacco options for smokers

If you’re weighing your options after the 2026 rate rise, here’s how a few products stack up on fit and cost shape, all available through Cigarette Central, a retailer built around cheap cigarette online pricing for Australian smokers.

Premium Loose Tobacco 1kg, Top Value, Deep Flavour Control, Nationwide Dispatch: best for smokers who roll regularly and want the lowest cost per gram, sold in a full kilogram with nationwide dispatch built in.
Premium Loose Tobacco 500g, Rich Blend, Smooth Rolling Experience, Fast Shipping to Your Door: suits smokers who want a smaller commitment than the 1kg option, with fast delivery straight to the door.
Esse Change Double Apple Mint Orange Cigarettes 20s x 10 Packs, Capsule Flavour Slim Design, Best Price Fast Delivery Australia-Wide: fits smokers who want a flavour capsule format in a slim design, sold in bulk packs of 10 with fast delivery Australia-wide.

For more on how loose tobacco pricing compares gram-for-gram, see our loose tobacco pricing guide, and for value brand examples, check our 2026 guide to value tobacco brands.

Comparison of Australia’s tobacco excise rates with other countries

Australia’s approach to tobacco tax, built on regular indexation tied to wage growth, has pushed its excise rates toward the top of the global table. The combination of a high per-stick rate and mandatory plain packaging has made Australia a frequent reference point in international tobacco control discussions, cited for having some of the strictest and most expensive settings anywhere.

Other high-income countries, including the United Kingdom and New Zealand, also apply substantial per-stick or per-pack excise as a public health lever, but the exact mechanics differ: some rely more heavily on ad valorem tax tied to retail price, while Australia’s system is a fixed per-stick or per-kilogram charge adjusted twice yearly. That structural difference makes direct dollar-for-dollar comparisons difficult without converting currencies and adjusting for local retail margins and GST or VAT equivalents. What’s consistent across these markets is the underlying logic: higher prices are used deliberately to discourage smoking, particularly among younger or price-sensitive buyers, even as policymakers in each country debate where the point of diminishing returns sits.

Projected impact on government tax revenue from the 2026 excise increase

Governments have historically relied on tobacco excise as a dependable revenue stream, but that reliability is being tested. The Parliamentary Library’s 2026 analysis points to a downward revision of roughly $1.32 billion in expected excise receipts for the 2026 to 2027 period compared to earlier forecasts, a signal that rising prices aren’t translating into proportionally higher revenue.

The likely explanation is a mix of fewer legal purchases as smokers cut back or quit, and a portion of demand shifting to illicit tobacco that pays no excise at all. That combination is exactly what the Senate inquiry flagged as a reason to pause further automatic increases: if each rate rise delivers a smaller revenue gain than the last while pushing more buyers toward untaxed product, the policy starts working against its own budget assumptions. Whether the 2026 rate holds as a turning point or the trend continues into 2027 will depend heavily on how effectively the new illicit tobacco enforcement measures perform.

Market outlook: what retailers and smokers do next

Retailers typically respond to excise rises with sharper promotions rather than flat price hikes, and pack-size adjustments are common as brands try to soften the jump for loyal buyers. Expect more bundle deals and loose tobacco specials as the RYO equivalisation change narrows the old price advantage.

On enforcement, the Combatting Illicit Tobacco Bill’s expanded powers should, in theory, make illegal product harder to source, which matters because the SERP a smoker or retailer is really navigating is a legal one, not a shelf. Whether penalties translate into fewer illicit sales on the ground is the thing worth watching over the next year, and it’s a theme we keep coming back to in our analysis of why online tobacco costs less.

— Local Cigarette

Browse lawful, competitively priced tobacco at Cigarette Central

Higher excise doesn’t mean you have to overpay. Browse the cigarettes range or check current loose tobacco and express shipping options to find a lawful, cheap cigarette online option that suits your budget.

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FAQ

How much will cigarettes cost in Australia in 2026?

There’s no single fixed price, since retailers set their own margins on top of excise and GST, but the excise component on a 20-pack alone works out to roughly $31.05 from 1 September 2026, based on the ATO’s per-stick rate of $1.55274. Add GST and retailer margin, and many packs sell well above $40.

What are the current tobacco excise rates in Australia?

From 1 September 2026, the excise rate is $1.55274 per stick and $2,587.90 per kilogram for tobacco not in stick form, according to the ATO. Rates adjust every March and September with AWOTE indexation.

How much did a stick of cigarettes cost in Australia in 1970?

This isn’t publicly listed in official excise records reviewed for this article, since detailed per-stick historical pricing from that period isn’t tracked the same way modern excise rates are. What’s clear is that tobacco excise has risen substantially since 2010 as governments leaned on price as a deliberate public health tool.

Which country has the highest tax on cigarettes?

Australia is consistently cited as having one of the highest tobacco tax burdens in the world, driven by its high fixed per-stick excise and twice-yearly indexation. Exact global rankings shift depending on currency conversion and how each country structures its tax, so treat any single “highest” claim as a snapshot rather than a fixed fact.

What can I do if excise keeps rising each year?

Budgeting ahead of the March and September indexation dates helps avoid surprise cost jumps, and comparing pack versus loose tobacco costs after the equivalisation change can reveal genuine savings. Buying from a compliant, licensed retailer also protects you from the legal risk that comes with illicit product.