US Senate Passes 1-Year Extension of Excise Tax Relief, Legislation Advances to President Trump

Beer, wine and spirits companies are a signature away from another year of federal excise tax relief.

The U.S. Senate today passed a tax extender package that includes a one-year extension of the tax relief in the Craft Beverage Modernization and Tax Reform Act (CMBTRA) that was slated to expire at the end of 2019.

Passage through the Senate comes a couple of days after the tax package passed the House of Representatives and in the final hours of the legislative year. The legislation now awaits President Donald Trump to sign it into law.

“We are pleased Congress has come together to prevent a $130 million tax increase on our nation’s thriving beer industry, which supports more than 2.1 million good-paying jobs,” Jim McGreevy, president and CEO of the Beer Institute, wrote in an email to the trade group’s members. “As we enter 2020, we will continue fighting for excise tax relief permanency with the popular bipartisan, bicameral Craft Beverage Modernization and Tax Relief Act.”

The extension of CBMTRA — which was passed into law in 2017 as part of the Tax Cuts and Jobs Act but scheduled to sunset at the end of 2019 — had been a priority for alcohol industry trade groups such as the BI, Brewers Association (BA), Distilled Spirits Council of the United States (DISCUS), the American Craft Spirits Association, Wine America, the Wine Institute, and the U.S. Association of Cider Makers.

If signed by President Trump, the extender would keep in place through December 31, 2020, an excise tax rate of $3.50 per barrel (a reduction from $7 per barrel) on the first 60,000 barrels for domestic brewers producing fewer than 2 million barrels annually.

The legislation also sets the federal excise tax to $16 per barrel on the first 6 million barrels for all other brewers and beer importers, while maintaining the $18 per barrel excise tax for brewers producing more than 6 million barrels.

The savings can be significant, especially for companies who are struggling with slowing growth. For example, a beer company making 20,000 barrels annually, its federal excise tax bill would be cut in half from $140,000 to $70,000.