Brewery, winery, and distillery owners – who are among the most heavily taxed businesses in the U.S. – should be raising a glass to celebrate the passing of the new tax bill.
Thanks to years of lobbying as a unified force, there’s a provision in the new bill that is going to give business owners in these three industries a big tax break over the next two years. Tacked on to the H.R.1 Tax Cuts and Jobs Act, the Craft Beverage Modernization and Tax Reform Act (CBMTRA) reduces the federal excise tax on alcohol manufacturers.
The Tax Break
For brewers who produce 2 million barrels or less, the provision lowers the excise tax from $7/barrel to $3.5/barrel for the first 60,000 barrels produced. That cuts the previous tax rate almost in half! Here’s the catch: although they lobbied for this to be a permanent tax cut, it’s only for the next two years.
For larger alcohol producers, the federal excise tax is reduced from $18/barrel to $16/barrel on the first 6 million barrels.
What this means for the alcohol industry
The Richmond Region is definitely a craft beer destination – with over 20 craft breweries and counting! It’s also home to three cideries, a meadery, two wineries, and three distillers. The tax cut will free up more working capital for business owners to reinvest in their businesses, expand, and create jobs.
This is huge for our growing dining and tourist scene!
If you’re a brewery owner, check out this update from the Craft Brewers Association on ensuring compliance. This tax cut officially went into effect January 1 2018. As a business owner, there are other pieces to this bill that may affect you. It’s best to seek professional help so that you can plan for the changes and adjust your financial strategy now – before it’s too late. Give us a call!