Beer tax goes up 100% if federal tax cut allowed to expire

SEATTTLE — Craft breweries are hoping lawmakers in the nation’s capital will prevent a tax cut from expiring and doubling the federal tax on each barrel of beer.

“It will be a financial hit to breweries across the country,” Sara Nelson, co-founder at Fremont Brewing, said.

In 2017, Congress passed a tax cut for breweries, distillers, and wineries. Nelson said that allowed them to invest in additional employee benefits, like extending health benefits to employees’ dependents.

“We've got young people that are getting married and having families, and they are needing benefits,” she said. “So we decided that we would extend health benefits to the dependents of those families.”

That includes Jeremy Czuleger, whose wife is pregnant.

“My son and my wife are currently on my health benefits through Fremont,” Czuleger said. “So when we add our new dependent, it will be added on to that same insurance… it's pretty important.”

The tax cut is set to expire at the end of the year, causing federal taxes to jump from $3.50 per barrel of beer to $7.00. Taxes would also jump at differing levels for wineries, of which there are more than 1,000 across Washington state, and for distilleries, of which there are more than 100.

“For us, it would be $175,000 [more] per year,” Nelson said.

She and the Washington Brewers Guild are especially concerned about smaller breweries.

“I think for many people, if they were to see this tax increase tax place on January 1st, they would have to put a hold on their future plans… for hiring,” Executive Director of the Washington Brewers Guild Annie McGrath said.

Right now, a one-year extension of the tax cut is part of a package lawmakers are expected to vote on this week to avoid a government shutdown. But if it doesn't pass, Nelson said there is valid concern about how it could affect the price of a pint.

“It seems logical that prices would have to go up to absorb that expense,” she said.

If and when the tax cut renewal passes, the next hurdle is making it permanent. McGrath said that would allow breweries to make long-term investments to grow.