The Craft Beverage Modernization and Tax Reform Act

In late 2017, Congress passed legislation including a two-year provision of the Craft Beverage Modernization and Tax Reform Act (CBMTRA). This lowered the federal excise tax (FET) for breweries, wineries, and distilled spirits producers for a period of two years. It is set to expire on Dec. 31, 2019.

In February 2019, Senators Ron Wyden (D-OR) and Roy Blunt (R-MO), and Representatives Ron Kind (D-WI) and Mike Kelly (R-PA) re-introduced the CBMTRA (S. 362/H.R. 1175) with the goal of making the lower FET permanent.

Why is this important?

Impacts of the Craft Beverage Modernization and Tax Reform Act

Since Jan. 1, 2018 a small brewer that produces less than 2 million barrels of beer per year is eligible to pay $3.50 per barrel on the first 60,000 barrels produced each year. This rate expires on December 31, 2019. Proposed legislation would make permanent the $3.50 per barrel rate. This and would provide approximately $49 million per year (based on 2017 data) to help strengthen our nation’s smallest brewers.

Once production exceeds 60,000 barrels, a small brewer must pay the same $16 per barrel excise tax rate that the largest brewer pays at 90 million barrels. This rate expires on Dec. 31, 2019. Permanently making the tax rate $16 per barrel on beer production above 60,000 barrels up to 6 million barrels would provide small brewers with an additional $30.3 million per year (based on 2017 data). This would allow small and independent brewers to make significant long-term investments and continue to create jobs.

Additionally, making the language in the Craft Beverage Modernization and Tax Reform Act permanent would:

  • Allow for consolidated bookkeeping for brew pubs.
  • Expand the list of ingredients that could be automatically included in a beer without approval from the TTB.
  • Allow brewers to collaborate on new beers by giving them the flexibility to transfer beer between breweries without tax liability.

What You Can Do

Wide support of this legislation is important to its ultimate success. The Brewers Association has forms to help you solicit the support of your local representatives, talking points, even letters you can use. Click here for details.

For more than 25 years, Beall Financial and Insurance Services, Inc., has been helping corporations and individuals protect their most important assets. The agency’s client base covers a spectrum of niche businesses, such as craft breweries, that require specialized insurance packages and knowledge. With California offices in Redlands and Newport Beach, Beall Financial and Insurance Services serves clients nationwide.