Cider, craft beer makers get US tax cut

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Varieties of craft beer are seen at a microbrewery. Makers of craft beer will enjoy lower taxes under the new tax reform. Reuters

(Reuters) – Makers of craft beer, artisanal spirits, hard cider and mead may lift their glasses a bit higher next year as the result of a little noticed provision in the sweeping tax overhaul the US Congress passed this week.
Tucked away in Part IX, sections 13801 through 13808, are sharply lowered excise taxes on a liquor cabinet full of alcoholic beverages made by small producers.

One provision also set up the first statutory definition of mead, an alcoholic beverage made of fermented honey, probably more familiar to scholars of the Dark Ages epic poem “Beowulf” than most American imbibers.

Small craft producers are a rapidly growing category of the alcoholic beverage industry in the US and the industry is gaining political clout. Sales of craft beer alone were $4.8 billion in the 12 months ended in January, according to data from Nielsen Holdings.

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“I’ve been working on the issue since 1993,” said Arthur DeCelle, a McDermott Will & Emery lobbyist working for the brewing industry. “I never thought it was going to happen.”

The 3,658 words were originally part of a bill introduced in January by Senator Ron Wyden, an Oregon Democrat, and 53 other Senators and 303 House members titled “The Craft Beverage Modernization and Tax Reform Act.”

For tax purposes, it defines alcoholic ciders as wine and widens the flavors that cideries can use.

The lowered tax gives the small producers a little more profit that can help them expand, experiment, market or even lower prices. For example, for hard ciders made with any kind of fruit besides apple or pear, the new law substantially lowers the tax to 7 cents a gallon from $1 for small producers. Cider had been taxed depending on what kind of fruit was used.

For a 12-ounce can of cider, the tax falls to less than a penny per can compared with about 10 cents a can.

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