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Two Federal Bills Seek Reduced Beer Taxes


 Should craft brewers (or all brewers) pay less taxes?

Evidence suggests that Americans’ taste for craft beer is growing. With the total beer market up only 0.5% in 2014, the market share of craft beer hit double digits (11 percent of the market, or 22.2 million barrels) for the first time. The Brewers Association predicts it will quench 20% of American beer drinkers’ thirst by 2020.

There is even a House caucus dedicated to craft beer. 145 members from 39 states and the District of Columbia currently comprise the House Small Brewers Caucus, and the Senate Bipartisan Small Brewers Caucus has 26 more (from 21 states). They’re exploring the art and science of craft-brewed beer and the business side of brewing, noting that the “majority of Americans live within ten miles of a craft brewer."

The Small Brewers Caucus website doesn’t mention tax. However, many lawmakers in Washington are interested in the taxes brewers pay. In fact, two bills seeking to lower the federal excise taxes on beer have been introduced this session: the Small BREW Act and the Fair BEER Act.

As the law now stands, the rate of tax imposed “on all beer brewed or produced and removed for consumption or sale, within the United States, or imported into the United States” is “$18 for every barrel containing not more than 31 gallons.” There is a reduced rate of $7 per barrel “on the first 60,000 barrels of beer which are removed in such year for consumption or sale” for brewers producing “not more than 2,000,000 barrels of beer during the calendar year.”

The Small BREW Act

Under the Small BREW Act (S. 375), a brewer producing “not more than 6,000,000 barrels of beer during the calendar year” would pay the following:

  • $3.50 on the first 60,000 qualified barrels of production, and
  • $16 on the next 1,940,000 qualified barrels of production.

The reduced rates under Small BREW Act apply only to beer that has been domestically “brewed or produced.”

The Fair BEER Act

The Fair BEER Act (H.R. 767) would remove or reduce the tax on “all beer brewed or produced, and removed for consumption or sale, within the United States, or imported into the United States during the calendar year.” It seeks to impose the following rates (language taken directly from the bill):

  • $0 on so much of such beer as does not exceed 7,143 barrels,
  • $3.50 per barrel on so much of such beer as exceeds 7,143 barrels but does not exceed 60,000 barrels,
  • $16 per barrel on so much of such beer as exceeds 60,000 barrels but does not exceed 2,000,000 barrels, and
  • $18 per barrel on so much of such beer as exceeds 2,000,000 barrels.

The House version has been referred to the House Committee on Ways and Means; the Senate version has been referred to the Committee on Finance. This should allow plenty of time for the House and Senate caucuses to gather and research beer.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.