The Craft Beverage Modernization and Tax Reform Act which went into effect on January 1, 2018 lowers the federal excise tax for craft brewers, wineries, and distilled spirits producers. The savings will slash taxes through 2019 for now. Of course, many alcohol producers hope the tax cut will be extended beyond this two-year span.
For domestic brewers producing less than 2 million barrels annually, the new law cuts the excise tax rate on the first 60,000 barrels of beer from $7 to $3.50 per barrel. Brewers producing more than 2 million barrels annually will pay $16 a barrel, down from $18, on the first 6 million barrels produced. These cuts should save the beer industry a significant amount of money over the next two years. The Brewer’s Institute estimates that the excise tax relief provided in the new tax code could potentially create $320 million in annual economic growth for the industry. The new law also allows for increased collaboration between brewers by permitting transfer of beer between bonded facilities without tax liability.
Bob Pease, president and CEO of Brewers Association explained, “This is a monumental day for small and independent craft brewers. America’s small, Main Street brewers-6,000 strong and located in every state and virtually every congressional district in the country-are incredibly pleased Congress has recognized that they have great growth potential.”
Small breweries can take advantage of the tax cut and use the savings to invest in their breweries. This can expand operations with the possibility of creating more jobs.
What do you think?
Let us hear from all the craft brewers we have out there. How do you plan to take advantage of this tax cut over the next two years?