Federal Excise Tax Savings at Work in U.S. Breweries

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For the past decade the Brewers Association (BA) has been lobbying congress to recalibrate the federal excise tax (FET) for breweries. We believed that if brewers were paying less in FET, they would use the extra money to create jobs and reinvest in their breweries. At the end of 2017, we were successful in our lobbying when Congress passed legislation that included language lowering the FET for breweries, wineries and distilleries.

(MORE: Federal Excise Tax Overview)

Small and independent brewers located in the United States that produce less than 2 million barrels of beer a year saw the FET on their first 60,000 barrels (bbls) go from $7/bbl to $3.50/bbl, and every barrel (up to 2 million bbl) above that go from $18/bbl to $16/bbl.

Brewers that import or produce more than 2 million barrels of beer a year saw the FET on their first 6 million barrels go from $18/bbl to $16/bbl, while everything above that remains at $18/bbl.

Federal Excise Tax Savings Results

The new legislation went into effect on January 1, 2018. Now that we are more than halfway through the year, I wanted to share how breweries are using the money they are saving from the FET recalibration.

The BA has been surveying our members with a FET Survey. To date, more than 525 individual breweries have responded. The breweries who participated are located in all 50 states in the U.S. and range in size from 25 bbls per year to over 2 million bbls per year. When asked how they are using the federal excise tax recalibration savings:

  • 373 breweries responded that they would be increasing their economic development by purchasing new equipment, upgrading their tasting rooms and/or breweries, moving to new buildings, etc.
  • 282 breweries responded that they would be hiring new employees at an average of 2.7 new employees per brewery.
  • 206 breweries responded that they would be increasing their employee benefits by raising pay, offering insurance and expanding vacation time.
  • 112 breweries responded that they would be increasing their contributions to charity.
  • 308 breweries responded that they are doing two or more of the things mentioned above.

(MORE: CBMTRA Economic Benefits)

What Are Breweries Using Their FET Savings For?

  • Buying new equipment and hiring people to run it: Canning lines topped the list of new equipment being purchase by breweries. 35 breweries mentioned that they were either upgrading or purchasing new canning lines and and/or hiring people to run them.
  • Focusing on sales: Breweries are beefing up their sales and marketing teams. As many as 85 breweries mentioned that they will be investing money into their sales and marketing departments.
  • Improving quality: 27 breweries are either purchasing new lab equipment or hiring quality control lab techs and managers.
  • Investing in their existing employees: 23 breweries specifically said that they will be increasing wages for longtime employees, 80 breweries said that they will be increasing benefits by either providing healthcare or putting more money into an existing program and improving their 401k/retirement plans.

Federal Excise Tax Savings at Work in U.S. Breweries

We Need Your Help to Make FET Savings Permanent

The federal excise tax recalibration language is currently set to expire on December 31, 2019. 451 of the responding breweries stated that they would be more likely to make more capital investments if the legislation was made permanent or extended.

Fun Fact: Since the start of the year, the BA estimates that 543 new small and independent breweries have opened in the United States (as of 8/17/2018). These breweries have only ever operated under a $3.50/bbl FET rate.

The BA wants to help ensure that the breweries who are using the savings from the FET recalibration are able to continue to do so. We continue to reach out to our members of congress to share your stories with them and encourage them to make the FET recalibration permanent.

What you can to do help:

  1. Fill out the BA’s Federal Excise Tax Survey: It’s a short survey that will take less than 5 minutes of your time to complete, and the data in it is extremely valuable to our efforts to expand the legislation or make it permanent. If you’ve done any of the following things since the beginning the of the year, it’s likely because your brewery has benefited from the FET recalibration:
    1. Hired a new employee(s)
    2. Increased pay for existing employees
    3. Invested in or increased your contributions to healthcare and retirement plans
    4. Bought a new piece of brewing equipment
    5. Started a construction project on your brewery or tasting room
  1. Invite your federal legislator to visit your brewery: One of the most powerful tools we have is our grassroots activism. Many people still view craft brewing as a relatively new industry. Inviting legislators to visit your brewery gives them the opportunity to learn about all the business aspects that go into running a small, manufacturing, consumer-focused business. Here’s how to find out who your legislators are:
    1. If you already have a relationship with a staffer in your legislator’s office, reach out directly to them.
    2. If you don’t have a prior relationship, visit House.gov or Senate.gov and use your zip code to identify your elected official.
    3. Contact the BA’s Federal Affairs Manager Katie Marisic. She can connect you with your legislators and provide you with materials about the current issues the BA is focused on.

(MORE: CBMTRA House and Senate Cosponsors)

As the brewing industry has grown in the United States so have our political efforts at the state and federal levels. It is important that we actively share information with our elected officials about how legislation and regulation impact our business and the people who work for us.

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