Name: Campaign for Tobacco-Free Kids
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A State-by-State Look at the
1998 Tobacco Settlement 27 Years Later

Since the states settled their lawsuits against the major tobacco companies in November 1998, our organizations have issued annual reports assessing how well the states have kept their promise to use a significant portion of their tobacco settlement funds to address the enormous health and financial toll of tobacco use in the United States. This year’s report finds, once again, that most states continue to shortchange programs that prevent kids from using tobacco products and help people quit using tobacco.

This year (fiscal year 2026), total state funding for these programs amounts to just 3.4% of the $21.7 billion in revenue the states will collect from tobacco settlement payments and tobacco taxes.

The failure of most states to adequately fund these programs is of even greater concern this year because of efforts at the federal level to eliminate the CDC’s Office on Smoking and Health, which has helped lead national efforts to reduce tobacco use and provides critical financial and technical assistance to every state. The tremendous progress the U.S. has made in reducing tobacco use is at risk unless states step up their efforts and Congress restores funding for the CDC’s tobacco control program.

Tobacco Tax Increases: A Health and Revenue Win for States

To continue driving down tobacco use, states should significantly increase tobacco taxes and allocate some of the revenue to boost funding for tobacco prevention and cessation programs. The scientific evidence is clear that tobacco tax increases are one of the most effective ways to reduce smoking and other tobacco use, especially among kids. Tobacco tax increases have also been a reliable source of revenue for governments while reducing health care costs, including state Medicaid costs. In addition to funding tobacco control programs, revenues from tobacco tax increases can help states offset recent federal cuts to other critical public health programs, including large Medicaid spending cuts that shift costs to states.

The report details the health and economic benefits to each state from increasing its cigarette tax by $1.50 per pack. If every state and the District of Columbia did so, they would collectively:

Prevent 231,600 kids from smoking;
Prompt 860,300 adults to quit smoking within the first year;
Prevent 275,400 premature, smoking-caused deaths;
Save $14.3 billion in long-term health care costs, including $363 million in Medicaid costs in the first five years; and
Raise over $6 billion in new revenue in the first year alone.

States can achieve even greater public health benefits from larger tobacco tax increases and allocating some of the new revenue to fund tobacco prevention and cessation programs.

States Continue to Shortchange Tobacco Prevention Programs

Other key findings in this report:

This year, the states will spend $728.6 million on tobacco prevention and cessation programs, a $36.2 million decrease from last year and less than a quarter (22%) of the $3.3 billion recommended by the CDC for all states combined.
Only one state, Maine, currently funds its tobacco prevention and cessation programs at CDC-recommended levels.
Only 8 other states provide at least 50% of CDC-recommended funding levels.
17 states are spending less than 10% of CDC-recommended funding levels.
9 states are spending less than 5% of CDC-recommended funding levels.
Nationwide, tobacco companies are outspending tobacco prevention funding in the states by nearly 12 to 1. Tobacco companies spend more than $8.6 billion annually – nearly a million dollars per hour – to market cigarettes and smokeless tobacco products in the U.S.

Tobacco use remains the leading cause of preventable disease and death in the U.S., killing nearly 500,000 Americans every year and costing over $241 billion in annual health care expenses, more than 60% of which is paid by taxpayers through government programs like Medicare and Medicaid. Cigarette smoking is also a major risk factor for many chronic diseases, including cancer, heart disease, stroke, COPD and diabetes. While smoking rates have been greatly reduced, nearly 10% of U.S. adults – more than 26 million people – currently smoke, and more than 16 million Americans live with a disease caused by smoking. In addition, an estimated 2.25 million U.S. youth currently use a tobacco product, including over 1.6 million who use e-cigarettes.

By significantly increasing tobacco taxes and adequately funding tobacco prevention and cessation programs, states can save lives and billions in tobacco-caused health care costs.

This report is issued by the Campaign for Tobacco-Free Kids, American Heart Association, American Cancer Society Cancer Action Network, American Lung Association, Americans for Nonsmokers’ Rights and Truth Initiative.