Federal Excise Tax
Federal Excise Tax
The Tax Cuts and Jobs Act, passed by Congress in December 2017, provided a temporary reduction in federal excise taxes for all brewers and beer importers. Congress made these rates permanent at the end of 2020.
The federal excise tax rates are now:
- $3.50 per barrel on the first 60,000 barrels for domestic brewers producing fewer than two million barrels annually;
- $16 per barrel on the first six million barrels for all other brewers and all beer importers; and
- $18 per barrel rate for barrelage over six million.
These permanent federal excise tax rates provide much-needed relief for America’s brewers and beer importers, an industry that today supports nearly 2.4 million American jobs and generates more than $409 billion in economic activity. Maintaining these current federal excise tax rates for all brewers and beer importers enjoys broad popular and bipartisan support. According to polling done by the Beer Institute, 63 percent of Americans supported Congress making the current federal excise tax rates permanent for all brewers and beer importers. Further, more than 350 members of the House and more than 75 members of the Senate cosponsored the Craft Beverage Modernization and Tax Reform Act of 2019, which was included in a COVID-19 relief/year-end spending bill and made the excise tax relief for brewers and beer importers contained in the Tax Cuts and Jobs Act permanent.
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. The modest reductions in taxes, as well as tax certainty provides brewers and beer importers with the capital they need to recover from the COVID-19 pandemic, grow and develop for years to come and continue contributing hundreds of millions of dollars to our nation’s economy.
Beer Institute Position
The Beer Institute was founded in 1862 as the United States Brewers’ Association as a response to the institution of federal taxation on brewers, an issue still facing the industry today. Recently, the Beer Institute was a leader in uniting the brewing industry behind the Craft Beverage Modernization and Tax Reform Act, which was modified and included in the Tax Cuts and Jobs Act and made permanent as a part of a COVID-19 relief/year-end spending bill in December 2020. 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 maintaining the new, lower federal excise tax relief for all brewers and beer importers.