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 law provides much-needed relief for America’s brewers and beer importers, an industry that today supports more than 2.1 million American jobs and generates more than $328 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.
After a one year extension at the end of 2019, the changes in the Tax Cuts and Jobs Act are set to expire on December 31, 2020. Without Congressional action, America’s brewers and beer importers will face a $130 million annual tax increase. And the more than 2,000 new brewers that have opened their doors since the lower federal excise tax was enacted will see their excises taxes double.
Impact of the excise tax relief 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 were reduced by 50%. Large and regional beer suppliers, which jointly provide 58% of beer’s direct brewing jobs, saw their excise tax payments reduced by an average of 3%. In fact, 73% of the beer volume sold in the U.S. continues to be taxed at $18 per barrel.
Beer Institute Position
The Beer Institute was a leader in uniting the brewing industry behind the Craft Beverage Modernization and Tax Reform Act (S.362/H.R. 1175), which was modified and included in the Tax Cuts and Jobs Act. The bill has garnered broad and bipartisan support in both chambers of Congress—with more than 340 members of the House of Representatives and nearly three-quarters of the Senate cosponsoring 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 have increased resources to reinvest in their businesses, hire new employees and continue to innovate and create America’s favorite beers.
To allow these businesses to make long-term business decisions, the Beer Institute supports making federal excise tax relief for all brewers and beer importers permanent.
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