Vector Group Ltd. (NYSE: VGR) anticipates 59.79% of its distributions paid in 2008 on its common stock were taxable dividends and the remaining 40.21% were nontaxable returns of capital.

These distributions consisted of four quarterly cash distributions paid in 2008. Based on tax calculations, Vector Group has determined that its current earnings and profits for federal income tax purposes were 59.79% of the total quarterly cash distributions. Vector Group’s determination of its earnings and profits for 2008 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 2008 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.