Small BREW Act and Fair BEER Act Examined

There are two proposed bills through Congress right now and they are big news for the craft beer industry. Both bills bring revisions to the federal excise tax on beer produced by craft breweries. Under the current law, breweries that produce less than 2 million barrels (63 million gallons), must pay $7/barrel for the first 60,000 barrels they produce and $18/barrel for every barrel after the first 60,000. Breweries who produce more than 2 million barrels a year must pay $18 a barrel for every barrel produced.

The Small BREW Act

The Small BREW Act would revise these taxes by lowering the amount paid by breweries who produce less than 6 million barrels of beer each year. This number corresponds to the new “limit” that the Brewer’s Association puts on craft breweries. The original basis for the taxes seem to stem from the old definition of craft which limited the production to under 2 million barrels a year. This was changed in 2011 to accommodate for Samuel Adams’ parent company, Boston Beer, producing over that limit. The new definition included any brewery producing 6 million barrels a year or less, along with some other guidelines.

Under the Small BREW Act, the taxes would be lowered to the following:

0 – 60,000 – $3.50/barrels

60,001 – 2,000,000 – $16/barrel

Above 2,000,000 – $18/barrel

This would come as a huge savings to smaller breweries while maintaining taxes for the larger players, Anheuser-Busch InBev and Molson Coors. For instance, a brewery who produces about 50,000 barrels a year, this could be a savings of close to $175,000. For a smaller brewery who produces 2,000 barrels a year, the savings would still be $7,000.

This act is aimed at reducing tax costs for smaller breweries in hopes that that will be able to invest in their communities and provide more jobs. For a small brewery, a few thousand dollars could go a long way; whether it provides money to expand or the ability to hire another helper, the money will go to good use.

Fair BEER Act

There is also a competing bill that has been proposed called the Fair Brewers Excise and Economic Relief Act or the Fair BEER Act. This act would revise the excise tax for all breweries, micro and macro. Under this bill, the taxes would be altered to the following:

0 – 7,134 – $0/barrel

7,135 – 60,000 – $3.50/barrel

60,001 – 2,000,000 – $16/barrel

Above 2,000,000 – $18/barrel

This bill is aimed at lowering the amount of money paid by large corporations while also providing relief to smaller breweries. However, the larger breweries already pay much less percentage wise than craft breweries. When all is said and done with the Fair BEER Act, larger companies will be saving a few million dollars a year.

 

Many craft breweries and the Brewer’s Association have thrown their support behind the Small BREW Act as it helps out those who need it most while maintaining a slightly higher tax for the larger companies. In addition, the Small BREW Act applies only to breweries that are owned and operated within the United States and does not extend to imported barrels of beer. This keeps the tax savings more local whereas the Fair BEER Act applies to imported beer as well. Overall, the Small BREW Act is indeed fairer as it balances out what the breweries will pay in taxes compared to their overall income.

For more information on the bills, check out these sites.

Small BREW Act Text

Fair BEER Act Text

Brewer’s Association Comparative Infographic

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