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Craft Brewing Business

Congress reintroduces Small BREW Act (we start slow clap)

Small brewers have been anchors of local communities and America’s economy since the start of our history. Now, they deserve a tax break.
Small brewers have been anchors of local communities and America’s economy since the start of our history. Now, they deserve a tax break.

Hey, maybe this new Congress isn’t so bad. Republican controlled. 25 percent brand new candidates. And a renewed craft beer bill to boot. Last week was the first week of the 114th Congress, and Republicans and Democrats have already found two areas of agreement — beer and taxes — with the reintroduction of the Small Brewer Reinvestment and Expanding Workforce Act (Small BREW Act) in the House of Representatives. The bipartisan legislation was reintroduced by Representatives Erik Paulsen (R-Mn.) and Richard E. Neal (D-Mass.). Those guys are goddamn rock stars.

The Brewers Association — the not-for-profit trade association dedicated to small and independent American brewers — released a press release on the subject. The Small BREW Act seeks to recalibrate the federal beer excise tax that small brewers pay on every barrel of beer they produce. An earlier version of the bill, H.R. 494, was introduced in 2013 during the 113th Congress and also enjoyed significant bipartisan support, with a total of 182 Republican and Democratic supporters.

Read our summary of the Small BREW Act vs. The Beer Act right here.

Under current federal law, brewers making less than 2 million barrels (bbls) annually pay $7 per barrel on the first 60,000 barrels (bbls) they produce, and $18 per bbl on every barrel thereafter. The Small BREW Act seeks to establish a new rate structure that is reflective of the evolving craft brewing industry. If enacted, the rate for the smallest brewers and brewpubs would be $3.50 on the first 60,000 bbls. For production between 60,001 and 2 million bbls, the rate would be $16.00 per barrel. For production over 2 million bbls, the federal excise tax would not change from its current $18 rate per barrel. Brewers with an annual production of 6 million bbls or less would qualify for these tax rates.

“The rise in the popularity of craft brewing is a quintessential American success story,” said Congressman Paulsen. “Many of these brewers start out enjoying a hobby, but end up growing businesses that create jobs and provide a product that people enjoy. The tax code needs to catch up to the nature of the brewing industry and not penalize the nation’s small brewers.”

“As someone who represents many small brewers in Massachusetts, I can attest that craft breweries are locally owned, generate economic development and create good jobs,” said Congressman Neal. “They also make distinctive products for passionate consumers. I have been a vigorous supporter of the industry, and today, in a bipartisan manner, we are introducing legislation that gives these small brewers a substantial tax break. Our bill rightfully recalibrates the beer excise tax for America’s craft brewers, allowing them to grow and reinvest in their businesses. I look forward to working with my colleagues to get this initiative approved by the House of Representatives during this session of Congress.”

“We thank Congressmen Paulsen and Neal for their leadership to help America’s craft brewers—entrepreneurs who create jobs and drive the economy forward,” said Bob Pease, chief executive officer, Brewers Association. “While small brewers pay the same business and employment taxes as other business categories, they are also burdened with an industrywide federal and state excise tax which impede their growth. Now is the time to recalibrate the excise tax to foster growth and employment where it is primed to happen — among our country’s small and independent brewers. We look forward to working with Congress to ensure the passage of this fair and meaningful bipartisan legislation.”

Joining Congressmen Paulsen and Neal in the reintroduction of the Small BREW Act were Rep. Peter DeFazio (D-Ore.), Rep. Earl Blumenauer (D-Ore.), Rep. Patrick McHenry (R-N.C.), and Rep. Patrick Meehan (R-Penn.).

A Senate companion bill is expected to be introduced in the near future.

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