PORTLAND, Maine (NEWS CENTER) -- Brewers all over the country will get tax cuts just for producing beer as part of provisions in the new tax overhaul.
As part of the new tax plan, Congress passed the Craft Beverage Modernization and Tax Reform Act, which lowers the federal excise tax for breweries, wineries and distilled spirits producers.
Under the bill, the federal excise tax on beer will be reduced to $3.50/barrel (from $7/barrel) on the first 60,000 barrels for domestic brewers producing less than 2 million barrels annually, and reduced to $16/barrel (from $18/barrel) on the first 6 million barrels for all other brewers and all beer importers. The bill maintains the current $18/barrel rate for barrelage over 6 million.
Brewers' Association president and CEO Bob Pease said Friday that many of Maine's breweries do not produce more than 2 million barrels a year, and stand to see nearly 50 percent of their taxes slashed. He said the legislation is the product of nine years of work on these cuts.
"This was a team effort. A lot of us at the Brewers' Association and and a lot of our members from Maine that have traveled to DC or hosted members of Congress at their breweries and educated them about our industry," said Pease.
Pease said breweries like Allagash Brewing Company could save nearly $150,000 in taxes.
"These small businesses that men and women have started all over Maine and all over the country are going to take that savings and reinvest it into their business," said Pease.
President of Mast Landing Brewing Co. in Westbrook, Ian Dorsey, said Friday that the tax savings could be used for newer, larger, or more efficient equipment, more employees, or testing new styles of beer.
"I think it's a boon. You've got a lot of breweries that started in the last few years and they're navigating how do I get beyond this hump and something like this is going to be immediate relief." said Dorsey.
Dorsey said breweries file taxes to the federal government quarterly.
"In April when we file the Q1 of 2018, I'm going to feel the relief immediately," said Dorsey.
The provisions expire after two years, but many brewers plan to lobby for them to be renewed.
Co-founder of Lone Pine Brewing, John Paul, said "it's clearly a benefit to our industry."
In 2017, Mast Landing produced about 1,500 barrels. If they produce the same amount in 2018, they would see nearly $5,250 in tax savings.
"The implications of the overall tax bill are complex and we're still getting our arms around what it will mean for Allagash Brewing. We do expect that it will save our brewery money which we intend to invest in continued growth," said Allagash Brewing marketing director Jeff Pillet-Shore. "This is a great day for America's small brewers, which really are small Main Street manufacturers located in communities all across our nation. You only need to come out to Industrial Way on a weekend to see the positive impact small brewers are having on economies across the U.S."
The provisions go into effect on January 1, 2018.