Federal excise tax (FET) relief for makers of beer, wine and spirits is locked in place through the end of 2020.
President Donald Trump today signed into law a tax extender package that includes the Craft Beverage Modernization and Tax Reform Act (CBMTRA), which passed both chambers of Congress this week.
“The lower FET rates have been a boon to small and independent brewers located in all 50 states and nearly every congressional district,” Brewers Association president and CEO Bob Pease said in a press release. “These savings empowered brewers to reinvest in their businesses and resulted in an annual tax savings of more than $80 million.”
Trade groups from throughout the alcohol industry joined forces in 2019 to ensure the two years of tax cuts passed in 2017 that were slated to expire at the end of 2019 would either be extended or made permanent. The BA, Beer Institute (BI), Distilled Spirits Council of the United States (DISCUS), the American Craft Spirits Association, Wine America, the Wine Institute, and the U.S. Association of Cider Makers each rallied their respective members and consumers to contact their representatives and senators to support the bill.
“By signing legislation today to maintain current excise tax rates on beer for one year, President Trump provides brewers and beer importers the certainty they need to continue growing and reinvesting in their businesses, hiring new employees, innovating unique products, and serving America’s most popular alcohol beverage,” BI president and CEO Jim McGreevy wrote Friday evening in an update to the trade group’s members.
CBMTRA was first passed into law in 2017 as part of the Tax Cuts and Jobs Act with a sunset date of December 31, 2019. The extension signed into law today expires on December 31, 2020.
Industry leaders, including BI president and CEO Jim McGreevy, have now called for the push to make the excise tax cuts permanent.
The new law keeps in place the excise tax rate of $3.50 per barrel on the first 60,000 barrels for domestic brewers producing fewer than 2 million barrels annually. The rate for these brewers is half that of original $7 per barrel tax.
Brewers and beer importers producing more than 6 million barrels will pay $16 per barrel on the first 6 million barrels and $18 per barrel on volume above 6 million barrels.
This tax savings can prove significant for smaller producers. A 20,000-barrel brewery’s federal excise tax bill will be $70,000, compared to $140,000. The BI estimated the tax relief extension prevented a $130 million tax increase on the beer industry.