Craft breweries rally, lobbying for a tax break

Industry group tells Congress jobs would follow

WASHINGTON — Craft beer brewers marched on Washington last week for their industry’s first conference in the nation’s capital. They were there to engage in a local pastime that goes pint in hand with drinking: lobbying. As part of the conference, hundreds of small-scale brewers met with congressional staff members to press for a tax cut that they say would make it easier for them to brew more beer and hire more workers.

“For every 31 gallons that we brew, $7 goes to Uncle Sam,’’ said Jeff Hancock, a cofounder of DC Brau, one of five craft breweries that have opened in the District of Columbia and its close suburbs in the past two years.

The Brewers Association, which organized the conference, says 409 small breweries and brew pubs opened in the United States last year, up 18.5 percent from 2011.


The growth has not been lost on politicians. The bipartisan House Small Brewers Caucus, which has 116 members from 35 states, has introduced the Small Brewer Reinvestment and Expanding Workforce, or Small BREW, Act.

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Commercial beer makers pay a federal tax on every barrel of beer they produce. It is a progressive tax: Operations that produce fewer than 2 million barrels a year pay $7 on their first 60,000 barrels. For every 31-gallon barrel above 60,000, the fee is $18.

Only about 100 craft breweries in the United States produce more than 15,000 barrels a year. About 95 percent of craft breweries and brew pubs produce less than that. Bigger brewers, like Anheuser-Busch InBev, which produced 98.5 million barrels in 2011, pay $18 for every barrel.

The Small BREW Act would reduce the tax on the first 60,000 barrels to $3.50. For every barrel beyond 60,000 but before 2 million, the tax would be $16.

After 2 million, breweries would pay the full $18 tax. Any brewery that produces fewer than 6 million barrels a year — including the bigger craft players, like the Boston Beer Co., maker of Samuel Adams, which turned out 2.7 million barrels last year — would be eligible for the tax reduction.


Not everyone thinks the tax cut would be a good thing. The current levels were put in place in 1991 and have not changed since then.

A rate that kept pace with inflation would make the taxes closer to $12 for small brewers and $30 for the big beer makers.