Competing Bills Could Lower Federal Excise Tax for Brewers

by / Monday, 30 December 2013 / Published in Blog

23356748_mlThere are two bills currently being contemplated on Capital Hill that could cut taxes for brewers – the Small Brew Act and the BEER Act.   The reason there are two bills boils down to the simple fact that, while both aim to reduce the excise tax for brewers, the Small Brew Act would significantly decrease the federal excise tax for the smaller, craft brewers, but keep the same tax rate applicable to the large, “non-craft” brewers.  Currently, the excise tax is $7 per barrel on the first 60,000 barrels and $18 per barrel thereafter.  The Small Brew Act seeks to lower those rates to $3.50 per barrel for the first 60,000 barrels, $16 per barrel for production between 60,000 and 2 million barrels, and $18 per barrel for all barrels produced above 2 million.  Obviously, Big Beer does not think that is fair, and is putting its weight behind the BEER Act, which would cut the excise tax in half for all brewers.

The Small Brew Act would also change the IRS definition of small brewer from breweries producing less than 2 million barrels to breweries producing less than 6 million barrels.   While most craft brewers won’t be anywhere close to producing 6 million, or even 2 million barrels, because Boston Beer Co. is now producing close to 3 million barrels, there would still be room for it to grow under the “small brewer” umbrella.  One additional note, the Small Brew Act was introduced by Pennsylvania Representative Jim Gerlach, who represents some of the Philly suburbs and other areas to the north-west of the city, and is a member of the Small Brewers Caucus.

Whether either of the bills will be successful is hard to tell at this point, but the Small Brew Act seems to have substantial support.  We will follow along for any developments regarding these two bills.



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