Federal Excise Tax Overview

Because federal excise tax legislation did not pass in the 114th Congress, which adjourned in December 2016, bills that are identical or similar to the Craft Beverage Modernization and Tax Reform Act of 2015 will be reintroduced early in the 115th Congress. Brewers Association members will be notified when the legislation has been formally reintroduced. Learn more about how the bill could impact small and independent brewers below.

Craft Beverage Modernization and Tax Reform Act of 2015

Excise Tax Bills

S. 1562

H.R. 2903

The Craft Beverage Modernization and Tax Reform Act (S. 1562) was introduced in the Senate by Sen. Ron Wyden (D-OR), the Ranking Democrat on the Senate Finance Committee. Sen. Roy Blunt (R-MO) was the lead Republican on this bill. The companion bill in the House (H.R. 2903) was introduced by Reps. Erik Paulsen (R-MN) and Ron Kind (D-WI).

In the 114th Congress this legislation not only had the support of the beer industry (the Brewers Association, Beer Institute support and National Beer Wholesalers Association), but also vintners (Wine America and the Wine Institute) and distillers (American Craft Distillers Association and DISCUS) as well as related industries like the National Barley Growers Association, Hop Growers of America, National Association of Manufacturers, Canning Manufacturers Institute, Glass Packaging Institute, National Corn Growers Association, the Wine Grape Growers of America and more.

The intent of the bill was to update and modernize the excise tax and regulatory requirements for craft brewers as well as vintners and distillers, and thereby help to ensure the continued growth of America’s craft beverage industries. This legislation is tailored to promote job creation in each industry. Among other things, the bill would:

Reduce excise tax and regulatory burdens for brewers

Recalibrate excise taxes for brewers to provide more cash flow to allow them to reinvest in their businesses. (Sec. 201)

Under the bill, the federal excise tax would be reduced to $3.50/barrel (from $7/barrel) on the first 60,000 barrels for domestic brewers producing less than 2 million barrels annually, and reduced to $16/barrel (from $18/barrel) on the first 6 million barrels for all other brewers and all beer importers. The bill would maintain the current $18/barrel rate for barrelage over 6 million.

Simplify beer formulation and label approvals by exempting common beer ingredients (e.g., wholesome fruits, vegetables and spices) from lengthy TTB approval processes. (Sec. 202)

Increase collaboration between brewers by removing restrictions on tax-free transfers of beer, repealing unnecessary inventory restrictions and allowing expansions of breweries for packaging and storage facilities.  (Sec. 204)

Reduce compliance and tax burdens for all producers

Exempt beverage producers from complex capitalization rules for aged products and level the playing field between U.S. businesses and their international competitors. (Sec. 102)

Improve excise tax enforcement and administration

Expand TTB program integrity funding to crack down on tax cheats, while providing additional funding for TTB regulatory functions and label approvals. (Sec. 601)

Expand current TTB information sharing to all excise taxes administered by U.S. Customs and Border Protection (CBP) of the Department of Homeland Security.  (Sec. 602)