Why Are Cigarettes So Expensive in Australia? (2025 Tax Explained)
If you’ve been to the shops lately, you’ve probably had a bit of a shock at the register. A pack of smokes in Australia now costs upwards of $55—and that’s for a standard 25-pack. Premium brands? You’re looking at $60 or more. So what’s going on? Why are cigarettes so expensive in Australia compared to the rest of the world?
The short answer: tobacco tax. But there’s a lot more to the story, especially with the changes rolling out in 2025.
The Reality of Cigarette Prices in Australia (2025)
Let’s start with the numbers that hit home. In 2025, Australia officially has some of the highest cigarette prices on the planet. Here’s what you’re paying:
- Standard 25-pack: $55-$60 (depending on brand)
- 20-pack: $50+ minimum
- Roll-your-own tobacco: Similar price hikes per gram
For context, back in 2010, that same pack would’ve cost you around $15. The rapid increase isn’t random—it’s deliberate government policy designed to discourage smoking through your wallet. Popular brands like Manchester cigarettes and Marlboro Red have all seen similar price increases across the board.
Breaking Down the Tobacco Tax 2025
When you hand over your hard-earned cash for a pack of cigarettes in Australia, roughly 70% of that price goes straight to the government as excise tax. That’s about $35 out of every $50 pack.
Here’s how the tax structure works:
Excise Duty
Every single cigarette you smoke has approximately $1.40 in excise duty attached to it. That’s before GST even comes into play. The Australian government has been steadily cranking up this excise tax for years, and 2025 is no exception.
According to the Australian Taxation Office (ATO), these rates are updated regularly to keep pace with wage growth and public health goals.
The 2025 Tax Increases
From 1 September 2025, the government is implementing:
- Another 5% increase to tobacco excise (part of a three-year plan that started in September 2023)
- Regular indexation in March and September based on Average Weekly Ordinary Time Earnings (AWOTE)
- The September 2025 AWOTE indexation factor is 1.017
This means the cigarette price increase isn’t slowing down—in fact, it’s accelerating. Treasury forecasts suggest these increases will add an extra $3.3 billion to the federal budget over four years.
GST on Top
Don’t forget—after the excise tax is calculated, GST is charged on top of everything, including the tax itself. That’s right, you’re paying tax on tax.
Why Is the Government Doing This?
The official line from Canberra is simple: public health. The Australian government wants to reduce smoking rates and save lives. And to be fair, it’s working—sort of.
Smoking rates in Australia have dropped dramatically from 22% of adults in 2001 to around 10% in 2023, according to the Australian Institute of Health and Welfare. The theory goes that if cigarettes are too expensive, people will quit or never start smoking in the first place.
The Public Health Argument
- Fewer smokers mean lower rates of cancer, heart disease, and respiratory illness
- Less pressure on the healthcare system
- Healthier population overall
Australia has long been a global leader in tobacco control policies, pioneering initiatives like plain packaging and graphic health warnings that other countries have since adopted.
The Revenue Argument
Let’s be honest—the government also likes the money. Tobacco excise and customs duties generated over $15 billion for the federal budget in 2024-25. That’s a massive revenue stream that helps fund hospitals, schools, and infrastructure.
The Unintended Consequences: The Black Market Boom
Here’s where things get interesting—and problematic. While the government keeps hiking taxes, something unexpected has happened: a massive black market has emerged.
Current estimates suggest that nearly 18-20% of cigarettes smoked in Australia now come from illicit sources—criminal syndicates that evade taxes and sell at deep discounts. This black market is costing the government billions in lost revenue.
The Numbers Don’t Lie
- Tobacco excise revenue has dropped 39% despite tax increases
- The tax gap (evaded duty) sits at approximately $3.2 billion, according to the ATO’s tobacco tax gap report
- The government is spending an additional $156 million over two years just to combat illicit tobacco
Turns out, when legal cigarettes cost $60 a pack, plenty of Australians are willing to take their chances with illegal alternatives at half the price.
What This Means for Smokers in 2025
If you’re a smoker in Australia, the financial impact is brutal:
- Pack-a-day smoker: You’re spending over $20,000 per year on cigarettes
- Occasional smokers: Even a few packs a week adds up to thousands annually
- Budget strain: For many households, particularly lower-income families, this represents a significant portion of disposable income
New Regulations Coming in 2025
As if the price wasn’t enough, new requirements came into effect on 1 April 2025 (with a three-month transition period). Now every individual cigarette sold in Australia must have “on-product” health warnings such as:
- “Causes 16 cancers”
- “Shortens your life”
These warnings appear directly on each cigarette stick—a world-first initiative from the Australian Department of Health.
Looking for Better Value? That’s Where We Come In
At Super Cheap Smoke, we understand the frustration of sky-high cigarette prices. While we can’t change government policy, we work hard to offer the most competitive prices on legal tobacco products available in the Australian market.
We’re transparent about pricing, and we’re committed to helping you understand exactly what you’re paying for—and why. Browse our product range to find the best value cigarettes in Australia.
Will Cigarette Prices Ever Go Down in Australia?
The honest answer? Probably not.
The Australian government has committed to achieving a “tobacco-free generation,” as outlined in the National Tobacco Strategy 2023-2030, and ongoing budget pressures mean they’re unlikely to ease up on the tobacco tax cash cow anytime soon. Combined with twice-yearly indexation and the three-year 5% annual increase plan, prices are only going one direction: up.
What Can Smokers Do?
You’ve got a few options:
- Quit smoking – Obviously the government’s preferred option, and increasingly the most financially sensible one
- Shop smart – Compare prices, look for legal retailers offering competitive pricing. Browse our full shop to compare brands and find the best value
- Consider alternatives – Though be aware that vaping regulations are also tightening in Australia
The Bottom Line on Why Cigarettes Are So Expensive in Australia
So, why are cigarettes so expensive in Australia? It comes down to aggressive government taxation policy driven by public health objectives and revenue generation. With 70% of every pack’s price going to excise tax and GST, the tobacco tax 2025 increases show no signs of slowing.
The cigarette price increase has been dramatic—from $15 a pack in 2010 to $55-60 in 2025—and it’s pushed many smokers toward either quitting or seeking cheaper (often illegal) alternatives.
Whether this policy is working as intended is debatable. Smoking rates are down, but so is government revenue from tobacco, with a booming black market filling the gap. For now, Australian smokers are caught in the middle of this economic and public health experiment.
Frequently Asked Questions
How much of a cigarette pack price is tax in Australia?
Approximately 70% of the retail price of cigarettes in Australia is tax—made up of excise duty and GST. For a $50 pack, about $35 goes to the government.
When do cigarette taxes increase in Australia?
Tobacco taxes in Australia are indexed twice yearly—in March and September—based on Average Weekly Ordinary Time Earnings. Additionally, there’s a 5% annual increase for three years (2023-2025).
How much does a pack of cigarettes cost in Australia in 2025?
A standard 25-pack of cigarettes costs between $55-60 in 2025, with some premium brands exceeding $60. A 20-pack costs $50 or more.
Why is the black market for cigarettes growing in Australia?
With legal cigarettes costing $50-60 per pack, many Australians are turning to illegal tobacco that sells at a fraction of the price. The black market now accounts for nearly 20% of cigarettes consumed in Australia. However, buying illegal tobacco carries serious risks beyond legal penalties, including unknown product quality and health hazards.
Will cigarette prices decrease in Australia?
Unlikely. The government is committed to reducing smoking rates through high taxation, and ongoing budget pressures make it improbable they’ll reduce tobacco taxes anytime soon.
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