Extras on Excise: Bring Your Own Beer, Wine, and Spirits Excise Taxes


 

Clinking Glasses Outside

Summers are usually filled with barbeques and outdoor get-togethers, and many hosts ask their guests to bring their own beverages, often meaning the alcoholic kind. It’s no wonder that in fiscal year 2016 alone, sales of distilled spirits, beer, and wine generated more than $10 billion in federal excise tax revenue, according to IRS data. It’s apparent that we enjoy our alcoholic beverages regardless of the tax when looking at the amount of revenue generated between 1999 and 2016. 

Most of us frequent different stores in search of our alcoholic beverage of choice, and on occasion we’ll even glance at our receipts before we discard them. But often, receipts don’t indicate the excise taxes that are incorporated into the price of the item, before sales taxes are applied at the time of sale. 

For those of you who may wonder what excise taxes are imposed on your favorite drinks, click here for a 50-state tax rate chart, including the District of Columbia and New York City. The excise taxes covered pertain to distilled spirits, beer, wine, and cider. States impose excise taxes through tax rates, surcharges, and markup prices. Some tax rates are based on the alcohol by volume (ABV), alcohol by weight (ABW), or a percentage of the price. 

Recent changes to look out for in a few states:

  • Delaware’s tax increases on all alcoholic beverages;

  • Montana’s rate change for beer production over 10,000 barrels; and

  • Utah’s 2 percent markup price increase for all alcoholic beverages. 

According to the Tax Foundation, states with the highest taxes for distilled spirits, beer, and wine are: Washington, Tennessee, and Kentucky, respectively, based on tax rates as of Jan. 1, 2016.

 

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Should states increase alcohol taxes when revenue falls short?

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