Three Cheers for Craft Beer: Federal Government Approves Tax Break
UNDATED -- The changes to the tax law passed in December by the federal government will have a direct impact on small brewers. Part of the change included the "Craft Beverage Modernization and Tax Reform Act". It cuts the federal excise tax in half from $7 a barrel to $3.50 a barrel on the first 60,000 barrels a year.
Nick Barth is a co-owner of Beaver Island Brewing Company in St. Cloud. He says they plan to use the tax break to reinvest in the business.
When asked by our employees what we're going to do with it we said we're going to put it right back into you guys. So we're going to invest in some new equipment and some new techniques.
He says his brewery will pay about $17,000 less in taxes this year under the new law.
So this year we'll be just over 5,000. Last year, we died 3,300. The year before that we did 1,800. And our first year we did just shy of 800 barrels. So we're still quite a ways away from the 60,000 barrel mark. To be honest, I don't know if that's something in our 10-year plan. That is a substantially sized brewery.
Barth says Minnesota already waives the state excise tax for brewers his size because he says the state recognizes craft brewers are good job creators. He says small brewers are a big part of our nation's economy.
There are a lot of small breweries out there, especially under 60,000 barrels. You know with over 5,000 breweries in the nation, we're good job creators and good revenue generators for the state and the feds. So hopefully this will allow us to continue to grow our footprints and continue to add value to our economy.
The Minnesota Craft Brewers Guild says there are about 150 small breweries in our state.
The Craft Beer Guild has been pushing for the tax break for years. The federal tax is expected to go back to the $7 a barrel level after next year.
The Beer Institute said the cut should encourage $320 million in economic growth for the industry each year.