Tax bill may give craft beverage makers extra year of relief

Special Reports

The tax extenders were tacked onto a massive spending bill that still has to pass the Senate

WASHINGTON (KOIN) — Craft distilleries, breweries and wineries could see an extra year of tax breaks if a massive, year-end spending bill makes it past the U.S. Senate.

Late Monday, the U.S. House attached a package of tax extenders to the spending bill. It includes everything from the ability to deduct your mortgage insurance premiums to incentives for alternative fuels. It also includes an extension of the tax breaks for small alcohol producers until Jan. 1, 2021.

The Tax Cuts and Jobs Act of 2017 spurred those decreases in the Federal Excise Tax (FET). Distilleries saw the most dramatic benefit, with their 2018 and 2019 FET dropping from $13.50 per proof gallon to $2.70 per proof gallon on the first 100,000 proof gallons produced. The vast majority of Oregon-based distilleries put out fewer than 100,000 proof gallons.

Beer is normally taxed at $18 per barrel (31 gallons). Under the reformed rate, domestic breweries that produce fewer than 2 million barrels each year have been paying $3.50 per barrel on the first 60,000 barrels, and $16 per barrel on the next 1,940,000 barrels.

Oregon’s U.S. Sen. Ron Wyden was behind the original tax cuts for craft beverage makers in 2018 and 2019. He tells KOIN 6 he intended for the reduced rates to be permanent all along, and will continue fighting to make that happen with his Craft Beverage Modernization and Tax Reform Act. That bill was introduced in the Senate in February, but never had any further action taken.

The Brewers Association said it is happy about the extended tax cuts, but will continue to advocate for the permanent reductions.

In a press release Tuesday, Wyden wrote that the tax extender package also includes breaks for short-line and regional railroads, which he said is a win for “railroads like the Coos Bay Railroad, Lake County Railroad and Wallowa Union Railroad” in Oregon.

A representative for Wyden said the Senate is set to vote on the package Wednesday.

The bipartisan Committee For a Responsible Federal Budget said the spending bill and tax extenders could add $500 billion to the national debt over a decade.

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