Distilleries, craft brewers face tax increase if act not renewed

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OWENSBORO, Ky. (WEHT) – The end of the year could mean the end of some tax relief for distilleries and craft breweries around the nation, including those in the Tri-State. 

Congress has until new year’s eve to renew the Craft Beverage Modernization and Tax Reform Act, or the industry could see up to a 500% tax hike on drinks like bourbon and whiskey.

“We have a lot of momentum here at Green River Distillery, a lot of brands coming out,” said Master Distiller Jacob Call. While more bourbon is bottled at Green River Distilling, an expansion is in the works.

“We are in the middle of getting ready to start a bottling expansion here, about a $3 million bottling expansion in 2021,” Call explained.

The other number he is watching out for: an additional $1 million in taxes for next year the distillery would have to pay if the act isn’t renewed.

“It just seems to come down to the end of the year to get these things passed before the end of the holiday,” he said.

The act, first approved in 2017, and renewed last year, gives reduced tax rates on spirits, beer and other alcoholic beverages made and sold. For distilled spirits, it’s $2.70 per proof gallon on the first 100,000 gallons, but the unreduced rate is $13.50. On beer, it’s $3.50 per barrel on the reduced rate, and $7.00 unreduced.

“It would literally double a brewery’s tax bill on the federal level,” said Derek Selznick of the Kentucky Guild of Brewers. He also says if it’s not renewed, it can add to the problems craft breweries already faced during the pandemic, including restricted in-person dining the past three weeks in kentucky.(

“Right now, as one brewery owner told me, my business is above water, but I am on my tip toes and it’s up to my nostrils right now. People are struggling,” Selznick explained.

77 senators, including Indiana Senators Mike Braun and Todd Young, wrote to Senate leaders calling for the act’s renewal, saying producers are seeing less profits because of closures, which also impact farmers, truck drivers and other workers. 

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(This story was originally published on December 11, 2020) 

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