Vector Group Ltd. (NYSE: VGR) anticipates 74.68% of its cash distributions paid in 2006 were partially taxable for federal income tax purposes and the remaining 25.32% will be considered a nontaxable return of capital.  

Vector Group’s determination of its earnings and profits for 2006 and prior years has been filed with the Internal Revenue Service (“IRS”). Stockholders will be advised if there is any material change to the status of the 2006 distributions as a result of IRS review or audits.

Distributions that are not taxable as dividend income must be applied to reduce the adjusted tax basis of the shares on which the distributions are paid. If the nontaxable distributions exceed the stockholder’s basis in the Vector Group stock, a capital gain will result.

Stockholders should secure their own tax advice regarding the status of cash distributions under applicable federal, state and local tax laws.