Craft distillers, brewers are big winners with Trump tax cuts

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Category: craft distillers, brewers, Tax Cuts and Jobs Act of 2017, tax cuts, federal excise tax, Will Cheek

01.17.18

Craft distillers, vintners and brewers generally don’t boast about being in the profession for the money. Their passion and love of the artisan trade inspire long hours in often inhospitable conditions cooking up their favorite hooch. Or so they say.

The 2017 tax cuts make it a lot easier to pocket some extra change, particularly for small distilleries. Love him or hate him, President Trump gives reason to celebrate selling more small-batch whiskey, bourbon, gin and vodka.

Starting January 1, 2018, the federal excise tax for distilled spirits is slashed from $13.50 to $2.70 per proof gallon for the first 100,000 gallons produced. With savings of $10.80 per gallon, a distillery can save up to $2.16 million in taxes over the two-year life of the tax cut.

That’s not chump change, President Trump.

The challenge, of course, is selling all that extra product. Hard to save money if you have 100,000 gallons of liquor lying around to sell. That’s roughly 500,000 bottles of whiskey on the wall – take one down, pass it around …

Even the big boys can make money from the tax cuts. Excise taxes are reduced by 16 cents for production of 100,000 to 22 million proof gallons of distilled spirits. Doesn’t sound like much, until you do the math. That’s roughly $9 million in savings, assuming you can make – and sell – 44 million gallons of booze in the next two years.

The tax cuts are nearly as profitable for small brewers, who had already been enjoying an $11 per barrel reduction. The excise tax for brewing less than 60,000 barrels is reduced from $7 to $3.50 per barrel until December 31, 2019. A small brewer can save up to an additional $210,000 per year for the next two years. That’s a $1.74 million reduction from the normal $18 per barrel excise tax rate.

The tax bill also cuts the rates for wineries, starting at $1 per gallon of wine for the first 30,000 gallons.

Which brings us to the song of our blog, our raison d’etre, dredging up catchy lines penned by our favorite composers. As we blog, we keep humming ABC’s infectious hit “(How to Be a) Millionaire”

I’ve seen the future, I can’t afford it
Tell me the truth sir, someone just bought it
Say Mr. Whispers! Here come the click of dice
Roulette and blackjacks – gonna build us a paradise
Larger than life and twice as ugly
If we have to live there, you’ll have to drug me

The full text of the law is here. HR1 Craft Beverage Modernization and Tax Reform.docx

There are a number of other provisions that impact narrow segments of the industry and we recommend a complete review of the law for those with acute insomnia.