Congressman Issa Introduces Legislation to Reform Hookah Tobacco Taxation

WASHINGTON – Today, Congressman Darrell Issa (CA-48) and Congressman Don Davis (NC-01) introduced the Hookah Clarification Act of 2025, bipartisan legislation to amend the tax classification of hookah products under the 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. “This is a win for common sense and fundamental fairness, and I thank Rep. Davis for joining this important effort.”

The legislation amends section 5701 (f) of the Internal Revenue Code to create a subcategory for Waterpipe Tobacco (i.e., shisha), separating it from pipe tobacco to ensure it is classified appropriately.

Despite being significantly lighter, Hookah shisha is currently taxed by weight at the same rate as loose-leaf pipe tobacco. This bill adjusts the tax rate for hookah to accurately reflect that only 20 percent of the product is taxable tobacco. 

“Tobacco production remains a key pillar of eastern North Carolina’s economy and culture,” said Congressman Don Davis (NC-01). “We must create a level playing field to ensure all tobacco products manufactured in North Carolina are taxed fairly.”

Read the bill text here. 

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