Congress and the president recently passed a massive $2.3 trillion COVID relief bill. Amidst the bill’s hundreds of pages, it contained additional regulations about making the temporary Craft Beverage Modernization Act (CBMA) permanent. This effectively reduces the federal excise taxes paid by smaller breweries, wine producers and distilleries, or provides tax credits.
A little history
The initial Craft Beverage Modernization and Tax Reform Act (CBMTRA) was implemented as part of the Tax Cuts and Jobs Act of 2017. The bill was extended in 2019 and was set to expire on December 31, 2020.
Highlights include
For a deeper dive into the details, go to the Federal Treasury’s Alcohol and Tobacco Tax and Trade Bureau:
- Small domestic brewers pay a tax rate of $3.50 per barrel for the first 60,000 barrels shipped in the calendar year.
- Larger brewers pay $16 per barrel on the first six million barrels brewed per calendar year and $18 on subsequent barrels.
- It also includes statutory changes on the transfer of bottled distilled spirits in bond as well as the transfer of beer in bond not owned by the same entity.
- Wine producers are credited for $1 per gallon on the first 30,000 gallons shipped or imported per year, 90 cents on the next 100,000 gallons, and 53.5 cents on the following 620,000 gallons.
- Hard cider’s tax rate is 6.2 cents on the first 30,000 gallons per year, 5.6 cents on the following 100,000 gallons and 3.3 cents for the next 620,000 gallons.
- Distilled spirits distilled, processed, shipped, or imported during the calendar year are taxed $2.70 per proof gallon on the first 100,000 and $13.34 per proof gallon for the next 22.13 million proof gallons.
- It makes changes to the type of processing that qualifies for lower tax rates on distilled spirits.
- It also changes to a single taxpayer provision.
Still trying to figure it out?
The state and federal laws surrounding the manufacturing of alcoholic beverages are usually complicated, with answers from the governing bodies coming slowly. Those in a business that makes or sells alcohol (or looking to start one) often find it useful to work with an attorney who understands the laws and issues.