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Congress shrinks excise tax for smaller breweries

Sen. Roy Blunt helped lead the way for cut as part of federal tax reform

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Federal legislators have dropped a nice tip in the jar for beer brewers nationwide.

As part of congressional tax reform that passed in December 2017, Sen. Roy Blunt, R-Missouri, reportedly played a dominant role in cutting a portion of the federal excise tax on beer production by 50 percent, with varying effects based on the number of barrels brewed.

The Craft Beverage Modernization and Tax Reform Act became effective Jan. 1. The legislation drops the federal excise tax to $3.50 from $7 per barrel on the first 60,000 barrels produced by domestic brewers of less than 2 million barrels annually, according to the national Brewers Association.

The cut covers all of the half-dozen brewing companies licensed in Springfield.

Nationwide, for all other brewers and importers, the excise tax dropped to $16 from $18 per barrel on the first 6 million units, with an $18 rate remaining intact for barrelage exceeding 6 million, according to the Brewers Association.

With roughly 10,000 barrels brewed per year, Mother’s Brewing Co., 215 S. Grant Ave., stands to save about $35,000 annually in excise taxes paid to the federal government.

“Everybody got a cut, but it really helps small breweries,” Mother’s owner Jeff Schrag said as he celebrated the company’s recent launch in the St. Louis market. “Sen. Blunt was one of the key people in that. ... He’s been very supportive of craft beer in particular.”

Schrag noted the cut is only effective for two years, so Mother’s Brewing will use the tax savings for undetermined improvements in the short term.

At comparatively smaller White River Brewing Co., 505 W. Commercial St., owner John “Buz” Hosfield said the craft brewer annually produces about 1,100 barrels of beer for an excise-tax savings of nearly $4,000.

“Oh, it’s tremendous,” Hosfield said. “We pay on a monthly basis here, and it’s just amazing. You see your bill cut in half. We’re in the slow part of the season, so we haven’t really had an opportunity to see the total effect of it.”

He said the brewery may reinvest in equipment.

At Lost Signal Brewing, 610 W. College St., owner Tyler Hoke said his outfit delivered about 250 barrels of beer in 2017. The cut offers just $875 in excise-tax savings, but Hoke said money saved is money earned.

He said Lost Signal pays excise taxes on a quarterly basis, and about every third month of the year, “there’s just a larger sum of money that’s gone.”

“The savings for one year’s worth isn’t enough for me to buy, like, a new fermenter or anything,” Hoke said. “But that savings will be used, and it will help with the cash flow that month that we normally pay all of the taxes.”

Blunt wasn’t available for comment but provided Springfield Business Journal with an emailed statement.

“Missouri is home to many of the nation’s top craft beverage makers,” Blunt wrote. “This is an industry driven largely by small-business men and women, and providing tax relief for brewers, distillers and winemakers will help create new jobs and bolster our local economies.”

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