Federal Excise Tax Rates for Small Breweries, Distilleries and Wineries Permanently Reduced
It has been a long time coming! The Taxpayer Certainty and Disaster Tax Act of 2020 signed into law on December 27, 2020, included the permanent adoption of most of the provisions of the Craft Beverage Modernization Act (CBMA). The most significant of these is the permanent reduction of existing federal excise tax rates for small breweries, distilleries and wineries.
Excise tax rates were temporarily reduced for calendar years 2018 and 2019 with the CBMA provisions of the Tax Cuts and Jobs Act of 2017. However, these reduced excise tax rates were set to expire at the end of each year. This caused much financial uncertainty for beverage alcohol producers. With the recent permanent adoption of the reduced excise tax rates, beverage alcohol producers save money and have some degree of cost control they didn’t have before.
The CBMA provisions that are now permanent include:
- Reduced tax rates on beer and distilled spirits, with certain tax credits for wine
- Adjusted alcohol content for certain still wine tax classes from 14 percent to 16 percent alcohol by volume
- Lower tax rates for certain meads and low alcohol wines
- Transfers of beer in bond between brewers who are not of the same ownership
There are also changes to previous CBMA provisions that include:
- Restrictions on the transfer of bottled distilled spirits in bond
- Changes to the type of processing activities that qualify for reduced tax rates for distilled spirits (effective in January 2022)
- Changes to the Single Taxpayer provisions
The TTB will soon issue updated guidance related to the provisions that have changed.
Our craft beverage team can provide specific guidance and support to help you take advantage of these reduced tax rates and ensure you stay compliant with the updated regulations. To learn more about how we can support your regulatory compliance efforts, contact Michelle Howard, Consulting Manager, Advisory Services, at firstname.lastname@example.org or 314.983.1202.