When the federal Tax Cuts and Jobs Act was signed into law in December 2017, it included a specific provision that helps small businesses in the craft beverage industry.
Under the Craft Beverage Modernization and Tax Reform Act, as of Jan. 1, 2018, the federal excise tax for breweries, wineries, and distilled spirits producers is reduced through 2019. The craft beer industry is expected to save $142 million annually, and wineries are expected to save $3,000 to $452,000 (depending on production size). Meanwhile, the excise tax distillers pay per proof gallon will be slashed from $13.50 to $2.70 for the first 100,000 gallons, with larger producers saving 16 cents per proof gallon up to 22 million gallons.
In Tennessee, where craft beer and distilleries are booming, this means many small businesses will be investing these tax savings back into their businesses. Kris Tatum, president of the Tennessee Distillers Guild, told the Tennessean that guild members are ecstatic to reinvest in their businesses and that the Old Forge Distillery in Pigeon Forge—where he is a partner and general manager—plans to upgrade equipment and potentially add another staff member.
Others, however, are being cautious until they know whether this temporary tax break will become permanent. Linus Hall, owner of the Yazoo Brewery in Nashville, told the Tennessean that it’s difficult to hire more people, launch in new distribution markets, or buy new equipment if the tax savings will only be a one-time deal.