Washington, DC- Today, U.S. Senator Bob Casey (D-PA) announced that he and a bipartisan group of senators have introduced legislation, S. 375, The Small Brewer Reinvestment and Expanding Workforce Act or Small BREW Act, that would provide tax relief to craft brewers in Pennsylvania and throughout the nation. The bill will help Pennsylvania’s small brewers compete in an emerging industry by cutting the per barrel excise tax.
“Pennsylvania’s craft breweries are creating jobs and becoming key elements of local economies across the state,” Senator Casey said. “This is a commonsense, bipartisan proposal that will help small brewers compete. I’m hopeful we can move forward on the legislation this Congress.
Brewers generally pay an $18 excise tax on each barrel brewed (one barrel is 31 gallons). Small brewers (those that brew fewer than 2 million barrels of beer a year) pay a reduced excise tax of $7 per barrel for the first 60,000 barrels of beer they brew each year. The proposed bill would reduce the excise tax applicable in two ways. First, the tax rate applicable to the first 60,000 barrels would be reduced to $3.50 per barrel. Second, the tax rate on additional barrels below 2 million per year would be reduced to $16. These tax savings would be available to breweries with an annual production of 6 million barrels or less. The small brewer threshold and tax rate were established in 1976 and have never been updated. Since then, the annual production of America’s largest brewery increased from 45 million barrels to 105 million barrels. Raising the ceiling that defines small breweries from 2 million barrels to 6 million barrels more accurately reflects the intent of the original differentiation between large and small brewers in the U.S.
A March 2013 study at Harvard University highlighted the economic benefits of the bill: The proposed reduction in the federal excise tax on beer produced by small brewers (i.e., brewers producing up to 6 million barrels of beer per year) would increase economic activity by $183.1 million in 2013 and $1.04 billion over five years.