Federal Excise Tax
The Tax Cuts and Jobs Act, passed by Congress in December 2017, provided a temporary reduction in federal excise taxes on beer. The new law now provides much-needed relief for America’s brewers and beer importers, an industry that today supports more than 2.2 million American jobs and generates more than $350 billion in economic activity.
All U.S. brewers and beer importers received some excise tax relief under the Tax Cuts and Jobs Act, which specifically:
- Reduced the federal excise tax to $3.50 per barrel on the first 60,000 barrels for domestic brewers producing fewer than 2 million barrels annually;
- Reduced the federal excise tax to $16 per barrel on the first 6 million barrels for all other brewers and all beer importers; and
- Kept the excise tax at the current $18 per barrel rate for barrelage over 6 million.
Beer Institute Position
The Beer Institute was a leader in uniting the brewing industry behind the Craft Beverage Modernization and Tax Reform Act (S.236/H.R. 747), which was modified and included in the Tax Cuts and Jobs Act. The bill garnered broad and bipartisan support in both chambers of Congress—with more than 300 members of the House of Representatives and a majority of the Senate signing on to co-sponsor the legislation.
The beer provisions of the Craft Beverage Modernization and Tax Reform Act provide fair, equitable and comprehensive reform of the federal excise tax for all brewers and beer importers. As a result of the law, brewers and beer importers will have resources to reinvest in their businesses, hire new employees and continue to innovate and create America’s favorite beers.
Currently, the changes in the Tax Cuts and Jobs Act are set to expire in 2020. The Beer Institute supports extending the relief embodied in the Tax Cuts and Jobs act and making federal excise tax relief for all brewers and beer importers permanent.
Impact of the new law for brewers and beer importers
As a result of the changes made in the Tax Cuts and Jobs Act, 99% of U.S. breweries’ excise tax payments will be reduced by 50%. Large and regional beer suppliers, which jointly provide 58% of beer’s direct brewing jobs, will see their excise tax payments reduced by an average of 3%. In fact, 73% of the beer volume sold in the U.S. will continue to be taxed at $18 per barrel.
The Beer Institute is also working with the federal Alcohol and Tobacco Tax and Trade Bureau on regulations to ensure that the new law is implemented fairly and reflects the intent of the Tax Cuts and Jobs Act.
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