Senators Heidi Heitkamp (D-ND) and Barbara Boxer (D-CA) became the 51st and 52nd US Senators to officially co-sponsor the Craft Beverage Modernization and Tax Reform Act (S.1562). This bi-partisan bill seeks to lower the tax burden for all wineries, breweries and distilleries in the United States. It is the first bill proposed that would reform the federal excise tax system for all three major alcohol commodities.
WineAmerica, collaborating with our partner associations in Washington, DC, is working tirelessly to pass the Craft Beverage Modernization and Tax Reform Act. Originally co-sponsored by Senators Ron Wyden (D-OR) and Roy Blunt (R-MO), the bill does the following for wineries:
Expands Tax Credits for All Wineries
Under present law, wine is subject to an excise tax of between $1.07 and $3.40 per gallon, based on alcohol content and carbonation level. Qualifying small domestic wineries producing 250,000 wine gallons or less are eligible for a tax credit (Small Producer Tax Credit) generally equal to 90 cents per gallon on the first 100,000 gallons produced, with that benefit phasing out between 150,000 gallons and 250,000 gallons. This provision removes the phase out and replaces the credit with a new tiered credit system for wine produced in the US or imported as follows:
- 1.00 credit for the first 30,000 wine gallons produced
- $0.90 credit for the next 100,000 wine gallons produced (30,001 to 130,000)
- $0.535 for the next 620,000 wine gallons produced (130,001 to 750,000)
- All wine produced over 750,000 will be taxed at the regular rate.
- In addition, this provision removes the existing prohibition against claiming the credit for naturally sparkling wines.
Expands the Alcohol Threshold for Table Wine
Under current law, still wine is taxed at different rates based on alcohol content. Still wine containing not more than 14% alcohol by volume is taxed at $1.07. Still wine above 14% and less than 21% alcohol by volume is taxed at $1.57 per gallon. It is important to note that for labeling purposes alcohol content in wine may vary from the stated amount within certain tolerances, however no such tolerances exist for tax purposes. The bill would provide that wines up to 16% alcohol by volume qualify for the $1.07 tax rate, raising the threshold for table wine from 14% to 16%.
Increases Carbonation Tolerance Levels for Low Alcohol Wines
Current law provides a tolerance for still wine of 0.392 gram of carbon dioxide per hundred milliliters of wine, which is generally taxed at $1.07 per wine gallon. Wines exceeding this limitation are taxed as “sparkling wine” at either $3.30 or $3.40 per wine gallon. The bill would increase that tolerance to 0.64 gram of carbon dioxide per hundred milliliters of wine for wines produced primarily from grape or solely from honey and water (mead), which do not contain any other fruit and contains no more than 8.5% alcohol by volume.
The House companion bill (H.R. 2903), introduced by Representatives Erik Paulsen (R-MN) and Ron Kind (D-WI), has received official support from 282 members of the House of Representatives. A complete list of Craft Beverage Modernization and Tax Reform Act co-sponsors in the Senate can be found here and the House here.
Joint Reception Held Celebrating Collaboration
This week, WineAmerica, the American Craft Spirits Association, the Beer Institute, the Brewers Association, the Distilled Spirits Council of the United States and the Wine Institute held a joint reception for Members of the House and Senate and their senior staff. This was the first time that all six of the major alcohol advocacy groups have come together for such an event. The event featured many member products from each commodity and was attended by close to 300 people. Several members of Congress were in attendance, and we were honored that Representative Erik Paulsen (R-MN) the lead House sponsor of the Craft Beverage Modernization and Tax Reform Act was able to address the group. We hope to hold future collaborative events with our commodity partners in the future. Special thanks to the following WineAmerica members for donating product:
- Bedell Cellars, New York
- Biltmore Estate Wine Company, North Carolina
- Boordy Vineyards, Maryland
- Brooks Wines, Oregon
- Chateau Grand Traverse, Michigan
- Huber Winery, Indiana
- L’Ecole No. 41, Washington
- Mazza Vineyards, Pennsylvania
For more information about the Craft Beverage Modernization and Tax Reform Act, please contact Michael Kaiser, Director of Public Affairs, [email protected]
WineAmerica is the national voice the American wine industry. Based in Washington, D.C., WineAmerica represents wineries in 43 states and leads a coalition of state and regional wine and grape associations. As an industry leader, WineAmerica encourages the dynamic growth and development of American wineries and winegrowing through the advancement and advocacy of sound public policy.