Legislation Ensures Critical Tax Relief for Wineries Will Not Expire
WASHINGTON, D.C. — Wine Institute welcomed last night’s congressional vote to make permanent the lower wine excise tax rates originally enacted in 2017. The omnibus appropriations and COVID-19 stimulus package passed by the House and Senate makes the Craft Beverage Modernization and Tax Reform Act (S. 362/ H.R. 1175) permanent and will provide significant tax relief for all wineries for years to come. These excise tax provisions were set to expire at the end of this year had Congress not acted. The president is expected to sign the bill into law in the coming days.
“This legislation provides all wineries with certainty and critical tax relief and allows them to make long-term investments for the future,” said Robert P. Koch, President and CEO of Wine Institute.
“We are grateful for the incredible bi-partisan support for the bill and, in particular, for the champions who made it possible. Senators Ron Wyden (D-OR) and Roy Blunt (R-MO) first drafted this legislation more than five years ago and ensured a broad coalition of support among craft beverage producers. Sen. Rob Portman (R-OH) was instrumental in getting the legislation enacted in 2017 and made permanent this year. Rep. Mike Thompson (D-CA), Co-Chair of the Congressional Wine Caucus and Chair of the Select Revenue Subcommittee, built broad support in the House. We also owe special thanks to Ways and Means Committee Chair Rep. Richie Neal (D-MA), and Senate Finance Committee Chair Sen. Chuck Grassley (R-IA), for their leadership in guiding this legislation to enactment,” added Koch.
The Craft Beverage bill reduces excise tax payments for all the 4,000 plus wineries in California, which contribute more than $114 billion annually to the national economy.
KEY HIGHLIGHTS FOR WINE INCLUDE:
- Excise tax credit for all wineries made permanent. The legislation allows all wineries to continue to claim a credit of between $.535 and $1 per gallon on the first 750,000 gallons of production. The total value of the full credit is $451,700 per year, based on producing the full 750,000 gallons.
- Sparkling wine qualifies for the credit. Sparkling wine remains eligible to receive the tax credits mentioned above.
- Permanently increases the Alcohol by Volume (ABV) allowed for the $1.07 tax rate from 14% to 16% ABV.
- Permanently increases the carbonation allowed in certain low alcohol wines (8.5% ABV or less) taxed at the $1.07 rate from .392 to .64 grams of carbon dioxide per hundred milliliters.
CRAFT BEVERAGE MODERNIZATION & TAX REFORM ACT:
ANNUAL WINERY EXCISE TAX SAVINGS
| Winery Size | Annual Savings* | |
|---|---|---|
| 5,000 wine gallons (2,000 cases) | $2,139 | 86% |
| 20,000 wine gallons (8,400 cases) | $8,440 | 86% |
| 50,000 wine gallons (21,000 cases) | $16,141 | 75% |
| 100,000 wine gallons (42,000 cases) | $23,250 | 62% |
| 250,000 wine gallons (105,000 cases) | $225,270 | 73% |
| 500,000 wine gallons (210,000 cases) | $387,541 | 64% |
| 750,000 wine gallons (315,000 cases) | $482,807 | 60% |
| 2 million wine gallons (840,000 cases) | $572,743 | 29% |
Source: bw166 LLC *Estimated annual tax savings from expanded FET credit and 14-16% ABV change based on BOE data for California wineries. Individual winery savings vary and may be significantly higher depending on level of production between 14-16% ABV.
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