US Tax Reform Bill Will Give Big Breaks To Small Brewers

It’s not over till it’s over but the sweeping tax plan that was approved in the early hours of Saturday morning is a  big win for small and independent craft brewers assuming everything makes its way into the final bill.

The result of an amendment added by Senator Rob Portman of Ohio, the measure’s passage will slash the federal excise tax to $3.50 (down from $7 per barrel) on the first 60,000 barrels for those brewers who produce fewer than 2 million barrels a year.

It will also reduce the federal excise tax from $18 to $16 per barrel on the first 6 million barrels for all other brewers…another good thing.

For small brewers lower taxes right now are more important than ever…With the number of breweries now operating in the states fast approaching 6000, this bill’s eventual passage could be a game-changer for brewers given craft beer’s increasingly competitive environment.

And it’s not like big brewers won’t be seeing some tax relief either.

Under the new tax bill, Anheuser-Busch, who reportedly “hired 19 lobbying firms in addition to its in-house lobbyists to work on the company’s tax issues this year,” may see millions of dollars in saving as things stand now…but not nearly the same degree of tax relief that smaller breweries will enjoy.

And Jim McGreevy, President and CEO of the Beer Institute, a Washington, DC-based trade organization which represents brewers of all sizes, released a statement lauding the bill’s passage…

 

“The Beer Institute commends the Senate on their bold vision on tax reform and for including federal excise tax relief for America’s brewers and beer importers in the Senate tax reform legislation. Federal excise tax reform for beverage alcohol is a comprehensive and critical step forward that benefits all brewers and beer importers – large and small.”

So will consumers see cheaper beer as a result of this tax bill?

The short answer is probably not. The profit margins for small craft brewers are concerning small right now…

But these tax savings will allow many small breweries the ability to strengthen their competitive position. Allow them to maybe take on more bodies, upgrade their quality control labs and ensure that their taprooms can stay open for you to enjoy…

And given craft beer’s competitive climate nowadays, those things alone, will be welcome.

 

Excise tax infographic credit: Beer Institute

Jefferson Memorial Image credit: Brewers Association