Small brewer federal excise tax bill reintroduced in Congress

With the 113th Congress underway, the Brewers Association (BA), a not-for-profit trade group representing the majority of U.S. brewing companies, announced the reintroduction of H.R. 494, the Small Brewer Reinvestment and Expanding Workforce Act (Small BREW Act) in the House of Representatives. The bipartisan legislation, which was reintroduced by Representatives Jim Gerlach (R-Pa.) and Richard E. Neal (D-Mass.), seeks to recalibrate the federal beer excise tax that small brewers pay on every barrel of beer they produce.

Under current federal law, brewers making less than 2 million barrels annually pay USD 7 per barrel on the first 60,000 barrels they brew, and USD 18 per barrel on every barrel thereafter. The Small BREW Act would create a new rate structure that reflects the evolution of the craft brewing industry. The rate for the smallest brewers and brewpubs would be USD 3.50 on the first 60,000 barrels. For production between 60,001 and 2 million barrels the rate would be USD 16.00 per barrel. Any brewer that exceeds 2 million barrels (about 1 percent of the U.S. beer market) would begin paying the full $18 rate. Breweries with an annual production of 6 million barrels or less would qualify for these tax rates.

Nationally, small and independent brewers employ over 100,000 full- and part-time employees and generate more than USD 3 billion in wages and benefits and pay more than USD 2.3 billion in business, personal and consumption taxes. Consumer demand for the bold and innovative beers brewed by America’ s small brewers has grown significantly in recent years. However, because of differences in economies of scale, small brewers have higher costs for production, raw materials, packaging and market entry compared to larger, well-established multi-national competitors. Furthermore, efforts to increase state taxes for all brewers continue to threaten jobs and their economic stability.

Adjusting the tax rate would provide small brewers with an additional USD 60 million per year that would be used to support significant long-term investments in tanks and other equipment and create jobs by growing their businesses on a regional or national scale. Congress has not recalibrated the excise tax on small brewers since 1976. At that time, there were about 30 small brewers. Today, there are over 2,000.