Will Tax Cuts for Brewers and Distillers Be Part of Tax Reform?

A bipartisan group of lawmakers is looking to reduce the tax burden on small and large brewers and distilleries.  They have introduced the Craft Beverage Modernization Reform Act (H.R. 747) and Senate (S. 236).  This proposed tax reform would cut the excise taxes on small breweries while also providing tax relief for small vineyards, distilleries and larger breweries like SABMiller and Anheuser-Busch InBev.

In the past, small producers in the craft beer industry have looked to gain a competitive advantage over the large producers through lobbying efforts and vice versa.  This bill seeks to provide benefits for all sizes of producers to spur industry growth.  Currently, the craft beer industry is nearing a saturation point with the explosion of new craft breweries over the past 10 years.  Economists are skeptical that tax reform specific to this industry will generate substantial growth.

This bill currently has 46 Senate and 252 House co-sponsors and appears to be very close to having enough support to be passed.  It's too early to tell if this bill will be packaged as part of larger tax reform that has been promised by the Trump administration.

Specifically, this tax cut would reduce the excise tax on a small brewer's first 60,000 barrels to $3.50 per barrel from the current tax of $7 per barrel.  The tax on the next 1.94 million barrels would be reduced from $18 per barrel to $16 per barrel.  In addition, this bill would also reduce the per gallon tax from $13.50 to $2.70 on the first 100,000 gallons of distilled liquor and cut the taxes from $13.50 to $13.34 for the next 22.13 million gallons.  This could have a major impact on distillers.  While this bill is being sold as an economic boost for small brewers, it is projected the distilleries would receive $177 million in tax benefits, more than any other industry.

Stay tuned to see if this proposed law will be passed or become part of larger overall tax reform.  Who knows, maybe you will see the impact on your next bar tab, but I wouldn't bet a drink on it.

For more information, contact Schneider Downs or visit the Our Thoughts On blog.