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Wine Institute cheers permanent tax relief

Tim Hearden Wine bottles
Congress made craft beverage bill permanent as part of year-end legislative package.

The San Francisco-based Wine Institute is cheering Congress' recent vote to make permanent the lower wine excise tax rates originally enacted in 2017.

The omnibus appropriations and COVID-19 stimulus package passed by the House and Senate just before Christmas makes the Craft Beverage Modernization and Tax Reform Act (S. 362/ H.R. 1175) permanent and will provide significant tax relief for all wineries for years to come.

These excise tax provisions were set to expire at the end of this year had Congress not acted, the organization notes. President Donald Trump has signed the bill.

“This legislation provides all wineries with certainty and critical tax relief and allows them to make long-term investments for the future,” said Robert P. Koch, President and CEO of Wine Institute. “We are grateful for the incredible bipartisan support for the bill and, in particular, for the champions who made it possible."

Koch credited Oregon's U.S. Sen. Ron Wyden, a Democrat, and Sen. Roy Blunt, R-Mo., for drafting the legislation more than five years ago and ensuring a broad coalition of support among craft beverage producers.

He lauded numerous other lawmakers, too, including Rep. Mike Thompson, D-Calif., co-chair of the Congressional Wine Caucus and Chair of the Select Revenue Subcommittee, for building broad support in the House of Representatives.

The Craft Beverage bill reduces excise tax payments for all the 4,000 plus wineries in California, which contribute more than $114 billion annually to the national economy.

Key highlights

According to Wine Institute, the key highlights of the bill are:

  • Excise tax credit for all wineries made permanent. The legislation allows all wineries to continue to claim a credit of between $.535 and $1 per gallon on the first 750,000 gallons of production. The total value of the full credit is $451,700 per year, based on producing the full 750,000 gallons.
  • Sparkling wine qualifies for the credit. Sparkling wine remains eligible to receive the tax credits mentioned above.
  • Permanently increases the Alcohol by Volume (ABV) allowed for the $1.07 tax rate from 14% to 16% ABV.
  • Permanently increases the carbonation allowed in certain low alcohol wines (8.5% ABV or less) taxed at the $1.07 rate from .392 to .64 grams of carbon dioxide per hundred milliliters.
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