The most recent stimulus package, totaling about $900 billion, included $285 billion in relief for businesses.
The bill adds even more relief to craft breweries across the country as it relates to the Craft Beverage Modernization and Tax Reform Act (CBMTRA).
Current regulations tax $3.50 per barrel of beer on the first 60,000 barrels produced by breweries. The tax jumps to $16 for every barrel beyond 60,000.
The regulation was set to expire on Dec. 31. The stimulus bill permanently extends the regulation.
If it had expired, the cost would jump from $3.50 to $16 regardless of the size of a brewery.
“That’s huge. I can’t even imagine if that actually wasn’t extending and suddenly we had to pay four times as much in federal excise tax,” CEO of Redemption Rock Brewing Co. Dani Babineau said.
The Brewers Association had been lobbying for the federal government to permanently extend the regulation since 2009.
For more than a decade, the act would be extended just prior to its expiration.
Despite fighting for permanent extension, Babineu, who is on the board of directors for the Massachusetts Brewers Association, was quite surprised by the permanent extension.
“It was always something that was like one more year and then next year you have to do it again,” Babineau said. “It takes the pressure off of every years having to get nervous if this was going to go away.”
Because the bill only pertains to excise tax on breweries producing fewer than 60,000 barrels, the tax specifically targets small craft breweries.
For Redemption Rock, the savings associated with the extension was close to $10,000. The Worcester brewery is expected to produce 640 barrels of beer in 2020. At $3.50 a barrel, the excise tax for the brewery should be $2,240.
If the act expired, the excise tax for the small brewery would have been $10,240.
“If it happened, it would have been really bad and everyone would have had to pivot,” Babineau said. “It would have really slowed us down and our ability to function as a business.”
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New stimulus package permanently extends excise tax regulations saving craft brewers thousands - MassLive.com
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