Makers of craft beer, hard cider, artisanal spirits, and mead are likely lifting their drinks higher in 2018 due to a mostly overlooked provision in the tax overhaul passed earlier in the week by Congress.
The provision has much lower excise taxes on liquor cabinets loaded with alcohol that smaller producers make.
One provision sets up as well the first statutory definition for mead, the alcoholic beverage that is made from fermented honey and likely familiar more to scholars of the Beowulf poem than the majority of American drinkers.
Small producers are a quickly growing group in the industry of alcoholic beverages across the U.S. and it is gaining clout politically. Sales of just craft beer were at $4.8 billion for the 12 months that ended last January.
The words in the provision favoring craft makers were originally in a bill that was introduced last January by Oregon Democrat Sen. Ron Wyden, and 53 more Senators along with 303 members of the House known as The Craft Beverage Modernization and Tax Reform Act.
Alcoholic ciders for purposes of taxes are defined as wine and broaden the flavors cideries are able to use. The lowered rate for tax gives small producers more profit that will help them to expand market and even lower their prices.
Small producers of hard ciders made out of any type of fruit other than pear and apple will by 7 cents per gallon of tax, whereas before the price was $1.
For a 12-ounce container of cider, the tax becomes less than one penny a can, compared to 10 cents.
Small producers of wine get tax breaks as well as did sparkling wine makers.
Small makers of distilled spirits such as bourbon, vodka or gin will pay only $2.70 per gallon of tax on the first 100,000 gallons produced compared to $13.34 per gallon for the same amount before the overhaul.
Makers of craft beer will pay just $3.50 per barrel on their first 60,000 barrels made. Larger producers, of over 6 million barrels, pay taxes of $18 per barrel, which is the current level. A barrel of beer is equal to 31 gallons.
Sales of craft beer grew by approximately 6.2% during 2016, while sales of beer overall were flat. It represents 12.3% of the entire beer market. There are over 6,000 craft breweries as well as brew pubs, said the Brewers Association.