Today, Congressman Darrell Issa of California and Congressman Don Davis of North Carolina introduced new legislation aimed at reforming the tax classification for hookah products. The proposed Hookah Clarification Act of 2025 seeks to amend the current Internal Revenue Code.
“The Hookah Clarification Act will end longstanding confusion about the existing tax classification of hookah and establish clarity for the future,” said Rep. Issa. He expressed gratitude to Rep. Davis for supporting this initiative.
The legislation proposes an amendment to section 5701 (f) of the Internal Revenue Code, which would create a separate category for Waterpipe Tobacco, commonly known as shisha. This change aims to differentiate it from pipe tobacco in order to ensure appropriate classification.
Currently, hookah shisha is taxed by weight at the same rate as loose-leaf pipe tobacco despite being significantly lighter. The bill intends to adjust this tax rate so that only 20 percent of the product, which is taxable tobacco, is accurately reflected in taxation.
“Tobacco production remains a key pillar of eastern North Carolina’s economy and culture,” stated Congressman Don Davis. “We must create a level playing field to ensure all tobacco products manufactured in North Carolina are taxed fairly.”
For more details on the bill, refer to its text online.
