Breweries, Distilleries Reap Benefits of Excise Tax Cut
Small craft brewers and distillers are seeing the rewards of the new tax plan, passed by Congress in December. That package included a lower excise tax rate from $7 per barrel to $3.50 per barrel for brewers who produce less than 60,000 barrels of beer each year.
Small craft brewers and distillers are seeing the rewards of the new tax plan, passed by Congress in December. That package included a lower excise tax rate from $7 per barrel to $3.50 per barrel for brewers who produce less than 60,000 barrels of beer each year. That is good news for Great Basin Brewing Company, which produces nearly 15,000 barrels.
"It really isn't a huge amount of money," Tom Young, Brewmaster of Great Basin Brewing Company said. "It comes out to about a penny a bottle for us but the tax used to be two cents a bottle."
Those pennies add up. At 15,000 barrels per year, the tax savings is more than $50,000.
"A penny a bottle adds up and allows us to hire more people, more equipment, stimulate the economy and be just a little bit more competitive with some of our bigger brewing friends," Young said.
The tax cut affects distilleries differently. Those who produce less than 100,000 gallons per year get the lowest rate. They are taxed on the alcohol percentage per gallon. Colby Frey is the owner of Frey Ranch, which has 79,500 gallons aging in barrels. He says his federal excise tax dropped from $17.60 per gallon to $7.30 for an overall savings of $818,850 over approximately the next four years. He says that money helps him compete with large companies in terms of production and costs. While some smaller distilleries will see much smaller savings, Frey says it is proportionate to income and production.
Last year, the Nevada Legislature also passed a bill that increases the production of beer from 15,000 barrels per year to 40,000 barrels. Young says the previous regulations made it hard for small breweries to grow.
"We had absolutely no incentive to expand and since all that beer would go to our distributor, they weren't able to expand either," Young said.
Young says the company is expecting now. In the last couple of years, Great Basin has tripled its square footage and bought more tanks, quadrupling the production capacity. Great Basin is sold in Nevada, California and Utah, and Young hopes to add even more states. The extra money to invest makes expansion a little bit easier, helping other companies along the way.
"That money is going to stay right here in Nevada by us hiring more Nevadans, buying more equipment from Nevadans like these tanks here, and allowing our business to grow," Young said.
The lower excise tax sunsets on December 31, 2019. That is when the rate will double to its original amount. Along with the federal excise tax, breweries, distilleries and wineries also pay a state excise, commerce, sales and other state and local taxes.