President Trump signed into law H.R.1 today, which includes the Craft Beverage Modernization and Tax Reform Act (CBMTRA). CBMTRA lowers the federal excise tax for breweries, wineries and distilled spirits producers.
For brewers the bill will reduce the federal excise tax on beer 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 maintains the current $18/barrel rate for barrelage over 6 million.
The bill also increases collaboration between brewers by permitting transfer of beer between bonded facilities without tax liability.
The Brewers Association and many of its members have been advocating for a reduction in the excise tax for nearly 10 years. The effort originally gave only small brewers (less than 6 million barrels per year) a tax break, but after years of members of Congress not willing to “play favorites” by giving only one sector of the industry a tax credit, the BA worked with stakeholders in the big beer industry along with wine and spirits associations to write a comprehensive bill that provided tax relief to all. It is the first change to the federal excise tax since 1991, and the first decrease in the alcohol tax ever.
The provisions of this bill are effective January 1, 2018.