Craft beer makers are raising a glass to the passage of the Tax Cuts and Jobs Act.
In addition to lowering income tax rates for individuals, families, and employers, the Tax Cuts & Jobs Act that President Trump signed into law in December also lowered the federal excise tax by half for breweries making less than 2 million barrels per year, a category in which most small U.S. breweries fall under.
For the first 60,000 barrels, craft breweries will pay $3.50 per barrel instead of $7—a 50% rate reduction that could create an additional $320 million in growth, according to industry estimates. This tax relief is expected to give a boost to an industry that has been a major growth sector in recent years. Between 2012 and 2016 alone the number of breweries in the U.S. doubled by about 2,800, citing a 16% increase in an industry that provides more than 2.2 million jobs.
Jim McGreevy, President and CEO of The Beer Institute, lauded the passage of the tax reform and the boost that a reduced excise tax rate will provide to the economy:
“The Tax Cut and Jobs Act will provide critical federal excise tax relief for brewers and beer importers of all sizes and will enable America’s more than 5,000 breweries to add to the American economy through technology, innovation and jobs. We thank the more than 300 members of the House of Representatives and 55 members of the Senate who supported the Craft Beverage Modernization and Tax Reform Act.”
Tiffany Puza, operations manager of the Bad Lab Beer Company in New Hampshire explains how she plans to use the new tax savings to expand their marketing strategies and bring in new business:
“This tax break will let us build our first marketing budget. Before it, really every dollar we spent was going towards our product and keeping our doors open. Crucial items like six-pack carriers, labels, bottles, caps all need to be designed and they have very high minimum costs. Our prediction is we will double our output in the next year, so we’re going to have to work extremely hard to get our name out there to meet those numbers.”
Nicole Carrier, owner of Throwback Brewery in North Hampton, New Hampshire, also plans to reinvest tax savings into expansion of his business:
“We’re definitely going to use this money for more infrastructure here. Any time the government decides to side with small businesses and gives them extra capital to use, it’s an enormous help.”
In a similar manner, John Buetel from Keg Creek Brewing in Iowa said tax reform would save the brewery over $5,200 in 2018. Across the nation, the Tax Cuts & Jobs Act encourages the economic growth of local breweries by allowing them to keep their savings and expand their businesses.