MINNEAPOLIS (WCCO) — In the Minneapolis tap room of Insight Brewing, fellow craft brewers swilled beer and talked taxes. They were gathered to celebrate recently enacted regulatory relief.
“For us this money I can say goes into expansion, new equipment and it will go into hiring more people,” Lift Bridge Brewing’s Brad Glynn said.
Specifically included in the recently signed federal tax bill are reforms to ease regulatory red tape. But the biggest impact will be felt on the brewer’s bottom lines – the change will cut in half the excise tax paid on each barrel produced.
“This is a big deal,” says Rep. Erik Paulsen.
The Third District Congressman sponsored legislation known as Craft Beverage Modernization and Tax Reform Act. It was included in the tax reform package recently passed by Congress and signed into law by President Donald Trump in December.
Rep. Paulsen designed the legislation to further help grow Minnesota’s 140 craft brewers.
“We cut in half the excise taxes now going to be paid by a small brewer. So once you hit a level where you’re producing two million barrels, you’re not going to have that kind of tax break,” Paulsen said.
Paulsen noted that laws governing brewers had not been updated since the 1970s and well before the boom of smaller micro brews and the popular tap rooms. For years brewers had been paying $7 federal excise tax on every barrel of beer produced.
That now shrinks to $3.50 per barrel.
What it means is that a brewer that produces 30,000 barrels a year would see a tax savings of $105,000 a year.
It’s hoped that money fuels brewery expansions, jobs, and better pay and benefits for brewery workers.
“If we hit our sales projections for next year this excise tax alone will allow us to extend benefits to all our employees,” Dan Justesen, president of Utepils Brewing in Minneapolis, said.
But more than tax savings, craft brewers will have less red tape. Making it easier to brew new flavors and spread more craft breweries across the state.
The legislation isn’t just for craft breweries, but also eases regulations on the state’s cider, wine and distilled spirits industries.