Texas has collected more than $15.8 billion from cigarette makers since settling its 1998 tobacco lawsuit. Another payment of about $450 million is expected imminently, according to The Texas Lawbook in its July payment update.
The deal is the Texas Comprehensive Settlement Agreement and Release. That is the state's separate repayment agreement with major cigarette makers for smoking-related public health costs. It does not create a payout fund for individual smokers or families.
Official resources:
- Read the original report from Texas — Use this primary source to review the complete report.
- Read the official guidance from Texas — Use this primary source to verify the official guidance.
Table of Contents
- Why did Texas settle alone?
- How do yearly payments continue?
- Where does the money go?
- Can residents file a claim?
Why did Texas settle alone?
Through Attorney General Dan Morales, Texas sued major tobacco companies in 1996 over smoking-related Medicaid costs. It settled on the eve of trial in January 1998 for $15.3 billion, according to The Texas Lawbook's 2016 review. The timing let Texas set its own payment terms.
Texas did not join the 46-state Master Settlement Agreement. It signed its own Texas Comprehensive Settlement Agreement and Release, approved Jan. 22, 1998, according to the U.S. Court of Appeals for the 5th Circuit in its appellate summary. That separate path explains why Texas payments follow state rules.
How do yearly payments continue?
Settling manufacturers must pay Texas about $500 million each year in perpetuity as repayment for public-health spending, according to the Supreme Court of Texas in its 2016 ruling. The payments do not end after a fixed total is reached. A most favored nation clause tied to Minnesota's later settlement added $2.3 billion in July 1998. That raised the Texas deal to $17.3-$17.6 billion, then the largest single-case settlement.
The Texas Lawbook reported the increase in its 2016 review. The annual amount adjusts for inflation, U.S. cigarette sales volume, and company operating profits. The Texas Comptroller explains that receipts fall as smoking declines. Texas therefore collects less in years with lower cigarette sales.
Where does the money go?
Settlement receipts flow to General Revenue-Dedicated Account 5040 and average about $486 million per year. The money is legally unrestricted, so lawmakers may spend it on any purpose, according to the Legislative Budget Board in its budget brief. Tobacco prevention is allowed but not required.
Counties and hospital districts that joined the case received separate support. About $2.3 billion through fiscal 2003 went to those local governments, including a $450 million lump-sum trust. That local share sits apart from the state's share, according to the Texas House Research Organization.
Can residents file a claim?
No. This settlement pays state and local governments, not individuals.
There is no claim form, filing deadline, payout table, or back-pay award for smokers, families, or Medicaid patients. Readers who see ads or calls promising Texas tobacco money should take these steps:.
- Do not submit medical records, ID numbers, or bank details to a tobacco-claim site.
- Do not pay a filing service for access to this settlement.
- If you need help with a separate injury case or benefits question, contact a licensed Texas attorney directly.
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