Cigarettes and tobacco productsCigarettes are taxed at $1 a pack on the federal level. Cigars are taxed between five cents and 40 cents each, depending on the size of the cigar. There also are taxes on pipe tobacco, snuff and other processed tobacco products. The money goes to the federal budget’s general fund and is not earmarked for a special purpose. It is the second largest federal excise tax, expected to raise $17.5 billion this fiscal year.