USA: Congress makes craft-brewery tax break permanent in COVID relief bill

The craft-beer industry appears to have dodged a doubling of federal excise taxes thanks to a provision in Congress’ long-awaited COVID-19 relief bill, The Daily Camera reported on December 22.

Buried within the almost-5,600-page bill is a permanent extension of the fermenters tax break, which applies to breweries, wineries and distillers. Both chambers of Congress voted to approve the $900 billion bill on December 21.

Under the provision first instituted in 2017, breweries that produce less than 2 million barrels annually are charged $3.50 per barrel in federal excise taxes for the first 60,000 barrels, down from the original $7 per barrel charge.

Larger brewers are charged $16 per barrel for their production between 60,000 barrels and 6 million barrels, down from the original $18 per barrel. Macrobrewers making more than 6 million barrels per year are charged $18 per barrel in federal taxes.

The provision also allows breweries to transfer beer to one another without incurring movement taxes.

The tax break was originally scheduled to terminate at the end of this year, something that the brewing industry lobbied aggressively against before the pandemic and in the past several months as widespread restrictions on eating and drinking establishments pushed several hospitality operators to the brink of closure.

Shawnee Adelson, executive director of the Colorado Brewers Guild, told BizWest that the permanent extension is a win, particularly for breweries that opened after 2017 and have never operated in an environment where their tax liabilities would be double that they’ve been paying.

“It’s not the silver bullet that’s going to save all the breweries out there, but it is one more thing that they can count on to help them get through this,” she said.

However, the relief bill isn’t a total home run for brewers.

The RESTAURANTS Act, which would have allocated $120 billion in grants to independent eateries and drinking establishments that are under capacity restrictions, was not included in the final bill. Instead, those establishments can apply for a portion of a new round of $275 billion in Paycheck Protection Program funds.

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