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A Holiday Gift for American Wineries? Cuts in Alcohol Excise Taxes Are Included in Republicans' Final Tax Bill

A provision in the Republicans’ tax bill will reduce the tax burden on wineries, breweries and distilleries
Congress is expected to pass the tax cut bill on a party-line vote this week.
Photo by: iStock/uschools
Congress is expected to pass the tax cut bill on a party-line vote this week.

Emma Balter
Posted: December 18, 2017

Updated Dec. 22: President Donald Trump signed the Tax Cuts and Jobs Act. It will take effect Dec. 31, 2017.

Updated Dec. 20: Both the House and the Senate have passed the Tax Cuts and Jobs Act on a nearly party-line vote. Next, the legislation will be sent to the president's desk for signing.

After weeks of negotiations, congressional Republicans have crafted a tax-cut bill they believe can pass both the House and Senate this week. And the latest version of the Tax Cuts and Jobs Act includes the most extensive cuts to federal alcohol excise taxes in decades, which means wineries will be one of the bill's big winners if both chambers pass the bill and President Donald Trump signs it into law.

The excise tax provision will significantly expand tax credits that are currently limited to only small wineries. It also redefines table wine as having up to 16 percent alcohol by volume, an increase from the current 14 percent, putting many higher-alcohol wines in a lower tax bracket. Overall, wineries will receive a significant cut on their effective tax rate, ranging from approximately 10 percent to 65 percent, depending on production levels.

The cuts were originally a stand-alone bill with broad bipartisan support, the Craft Beverage Modernization Act, which was introduced as an amendment to the Senate version of the larger tax-cut bill. After the Senate passed it, GOP leaders needed to craft a compromise version that both the Senate and House could agree on. The excise tax cuts made the final bill text, which was publicly released Dec. 15. However, the alcohol provision will sunset after two years, which means wineries, brewers and distillers will need to lobby to make the cuts permanent if they want to see long-term benefits.

Many in the industry had lobbied for the legislation and were happy it made it in. "The Craft bill will be a real boost and help all wineries across the nation, including the nearly 5,000 in California, most of which are small and family-owned," said Robert Koch, president and CEO of the Wine Institute. "Wineries are some of the most heavily taxed and regulated businesses in the country, and passage of the bill will provide meaningful relief from some of these burdens."

Both the House and the Senate must now vote on the new version of the bill. It is scheduled to go to the House floor for a vote Tuesday and then to the Senate on Wednesday. Republicans on the Hill—the sole orchestrators of the legislation—expect to have the votes in both chambers to pass it, and hope to have it on President Trump's desk by the end of this week.

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