Barring Renewal, Excise Tax Cuts Set to Expire

Small brewers got big tax relief in 2017, but the clock was set to two years. Will Congress act to renew the cuts?

Joe Stange Nov 23 - 4 min read

Barring Renewal, Excise Tax Cuts Set to Expire Primary Image

Two years ago, Congress passed and the president signed a wide-ranging tax law that included relief for American breweries, especially for the smaller ones. There was a catch: The tax cut was set to expire at the end of 2019, unless Congress acts to renew it.

With a little more than a month left on the calendar, Congress has yet to act.

Among other provisions, the Craft Beverage Modernization and Tax Reform Act (CBMTRA) reduced the excise tax to $3.50 per barrel for the first 60,000 barrels of beer at smaller breweries—those producing 2 million barrels or less per year. The law also otherwise reduced the general rates to $16 per barrel for the first 6 million barrels produced, and to $18 per barrel beyond that. The law also included tax relief for winemakers and distillers.

The Brewers Association has joined other beverage-industry groups in lobbying for the tax reform and its renewal. The Brewing Industry Guide reached out to BA Senior Vice President Paul Gatza to get a reading on its chances.


BIG: The year is getting short, and Congress is dealing with some high-profile issues; tax relief for breweries may not be top of mind. Then there is the risk of government shutdown. Do you have a read on the chances of the renewal passing before the law expires December 31?

Gatza: We continue to work with Congressional leadership to make sure CBMTRA continues to stay on their radars as a top priority, and we remain optimistic that together with our champions in Congress and across the beverage alcohol industry, we can get this passed by December 31.

BIG: Is the main hope at this point that it could be tacked as a provision on to something else? If so, any ideas as to what that could be? There is talk of a round of tax cuts aimed at the middle class, but it’s hard to gauge how much bandwidth Congress has when impeachment hearings are going on.

Gatza: Standalone legislation is not something we have expected with the bill, based on how excise-tax legislation has worked in the past. We hope that our legislative champions can find the right vehicle for the bill. We are open to any of their ideas as to what that legislative vehicle can be.

BIG: The 2017 law was meant to provide tax relief for smaller producers of beer, wine, and spirits. But it included loopholes that benefitted large distillers enormously. Has there been any discussion of closing those loopholes?

Gatza: There hasn’t been discussion on the beverage alcohol producers side to change the terms of the legislation. Any changes could cause complications for the alcohol segments working together, as well as for the legislative champions, which could make passage more difficult.

BIG: If the bill does not pass and the law expires on December 31, what could be the economic impact on independent brewers?

Gatza: For the 2,000 plus independent brewers who opened their businesses in 2018 or 2019, it means a doubling of their federal excise–tax bill. They have never known the $7 per barrel federal excise–tax rate that this doubling represents. Many of the brewers who used the 2018 and 2019 tax rate for capacity or employee investment will not see the doubled rate as something that will allow them to reinvest in people and equipment that will help them grow. In addition, all small brewers pay regular taxes that any normal business pays but have additional excise taxes at the state and federal level, which makes it a harder sector to compete in than those that are not impacted by excise taxes.

Joe Stange is Managing Editor of Craft Beer & Brewing Magazine® and the Brewing Industry Guide®. Have story tips or suggestions? Contact him at [email protected].