Ron Wyden and Fellow Senators Urge Extension of Favorable Tax Rate for Craft Distillers, Brewers

The federal excise rate is set to increase sharply for craft beers and craft distilled hard liquor next year.

Pelican Brewing's Tillamook location. IMAGE: Emily Joan Greene.

U.S. Sen. Ron Wyden (D-Ore.) and 49 other senators are pressing Senate leadership to extend federal excise tax breaks that greatly benefit the craft distilling and brewing industries.

Craft distillers currently pay a federal excise tax of $2.70 per proof gallon on the first 100,000 proof gallons they produce. That tax is set to increase 400% on Jan. 1, 2021.

Similarly, craft brewers who produced less than 2 million barrels annually (that would include all Oregon craft brewers) currently pay a federal excise tax of $3.50 per barrel.

That tax is set to double in the new year.

The tax rate craft brewers currently enjoy was a 2017 gift from Republicans, who sent President Donald Trump a package of tax cuts that greatly benefited Oregon's beer industry. With Democrat Joe Biden poised to enter the White House and the leadership of Congress in question, Wyden wants the generosity to continue.

Wyden, the ranking member on the Senate Finance Committee, which crafts tax policy, is the chief sponsor of the Craft Beverage Modernization and Tax Reform Act of 2019, which would, among other things, extend the tax breaks.

He and his 49 colleagues wrote to Senate Majority Leader Mitch McConnnell (R-Ky.) and Minority Leader Chuck Schumer (D-N.Y.) urging inclusion of Wyden's legislation in a year-end package.

"[W]ith the economic duress brought on by the COVID-19 pandemic, producers' businesses have been devastated, which would be compounded by an increase in their federal excise taxes," the letter says.

"Producers have already seen dramatic declines in revenue because of the closures of tasting rooms and restaurants, bars, and other on-premise establishments and cancellations of major sporting events and concerts. These losses ripple throughout the supply chain, affecting farmers, agriculture producers, manufacturers, truck drivers, warehouse workers, and countless others.

"It is imperative that the Craft Beverage Modernization and Tax Reform Act be included in the next appropriate legislative package and acted upon before the end of the year. As businesses struggle to retain workers and stay open, allowing the current rates to lapse would force many businesses across the country to lay off workers or close their doors permanently."

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