More than Proof Gallons
It’s only been a short while since President Trump signed the Tax Cuts and Jobs Act into law, and if you are like me, the reality of these much needed and wanted changes is still sinking in. For distillery owners, this is as close as it gets to winning the Publisher’s Clearing House Sweepstakes without Ed McMahon rising from the grave and knocking on the front door.
Significant ChangesThe most significant change to grab the headlines is the reduction of the Federal Excise Tax on the first 100,000 proof gallons. As we all know by now, the rate drops from $13.50 to $2.70 for the first 100,000 proof gallons. And there is a reason for this exuberance. Any distillery that produces 100K or more proof gallons in a given year will now have a million extra dollars to play around with! Just like good
Another major tax reform boon for craft distillers is the change in how spirits are transported in
Benefits of Tax ReformThese less restrictive rules of transfer can, and I bet will lead to more distilleries experimenting with blends and even forming some level of partnership with one another. Think about how many craft distilleries mess around with different mash bills. Now a distillery can get something they don't have space or resources to make themselves, in a small quantity, and try something new. At the very least, it will help basic networking between producers.
All Good Things Must EndAs happy as this news is, it’s time for the wet blanket. The Tax Cuts and Jobs act mainly reduces the tax burden on craft distilleries, along with some of the regulations. This is indeed a great thing, but there will still be tons and tons of red tape to cut through on a daily basis. All the usual
Another thing to keep in mind is that these tax cuts for distilleries are set to expire in two years. The original intent was for these tax cuts to be permanent, but somewhere in the Washington sausage grinder, they got limited to two years when amended onto the larger bill. That doesn’t mean that we can’t get them to be made permanent, but it will take serious work. We will have to hammer our representatives and senators to get that done.