Statement by Distilled Spirits Council President & CEO Chris Swonger on Senate Passage of the Craft Beverage Modernization and Tax Reform Act of 2019 (S.362/H.R.1175) in the Year-End Legislative Package Making Permanent the Federal Excise Tax Reduction for Craft Distillers
“I can guarantee you that across the country craft distillers and their employees will be raising a glass of their finest spirits this evening and toasting their legislators for supporting struggling craft distilleries in need of economic relief. By making the reduced tax rates permanent for small distillers, Congress is protecting jobs, boosting communities and helping to get these businesses back on a path of stability and growth. We look forward to the president swiftly signing this package into law.”
Introduced by Senators Ron Wyden (D-Ore.) and Roy Blunt (R-Mo.) and by Representatives Ron Kind (D-Wis.) and Mike Kelly (R-Pa.), the Craft Beverage Modernization and Tax Reform Act (CBMTRA) includes reforms enacted in 2017 that create a fair and equitable tax structure for brewers, winemakers, distillers and importers of all beverage alcohol. The tax reduction was renewed for one year in 2019 and was set to expire on Dec. 31, 2020. The bill has broad bipartisan backing with the support of 76 senators and 351 representatives.
Under CBMTRA, distillers pay a reduced excise tax rate of $2.70 per proof gallon for the first 100,000 proof gallons of distilled spirits (most craft distillers fall into this category); a rate of $13.34 per proof gallon for the next 22,130,000 proof gallons of distilled spirits; and a rate of $13.50 per proof gallon for production in excess of 22,230,000 proof gallons.
In addition to CBMTRA, the year-end legislative package also includes DISCUS-supported measures such as additional Paycheck Protection Program (PPP) funding and a second draw for eligible small businesses; expanded PPP funding for eligible restaurants and bars; deductibility for expenses paid with the proceeds of a forgiven PPP loan; and an expanded business meal tax deduction to assist restaurants severely impacted by the COVID-19 crisis.