Butterfly Creek Winery located in Mariposa, California
February 18, 2019 - Washington, D.C. - U.S. Representatives Ron Kind (D-WI) and Mike Kelly (R-PA) introduced legislation last week that will make permanent the tax benefits enacted by the Craft Beverage Modernization & Tax Reform Act. The legislation, originally introduced in 2015, received strong bipartisan support in both chambers and a two-year version was later enacted into law as part of comprehensive tax legislation that went into effect in 2018. H.R.1175 will make the existing producer tax credit and other tax benefits permanent for all wineries regardless of production size. The current provisions are scheduled to expire at the end of 2019 if Congress does not act.
“We applaud Representatives Kind and Kelly for leading the effort in the House to make the current law permanent,” said Robert P. ‘Bobby’ Koch, President and CEO of Wine Institute. “This legislation has allowed wineries across America – including 4,800 in California – to reinvest in their businesses by hiring new employees, expanding facilities and purchasing new equipment. However, the full potential of these benefits will not be felt until they are made permanent.” A Senate version of H.R.1175 was introduced last week by Sen. Ron Wyden (D-OR) and Sen. Roy Blunt (R-MO).
H.R.1175 will make the following key provisions for wine permanent:
- Applies the excise tax credit to all wineries. All wineries regardless of production size will be able to claim a credit of between $.535 and $1 per gallon on the first 750,000 gallons of production. The total value of the full credit is $451,700 per year, based on producing the full 750,000 gallons.
- Allows sparkling wine to qualify for the tax credit. Sparkling wine will be eligible to claim the tax credits mentioned above.
- Taxes wine containing up to 16% Alcohol by Volume (ABV) at $1.07 per gallon. Wines with 14% to 16% ABV were formerly taxed at $1.57 per gallon.
- Increases the carbonation allowed in certain low alcohol wines (8.5% ABV or less) taxed at the $1.07 rate from .392 to .64 grams of carbon dioxide per hundred milliliters.
Wine Institute is the public policy advocacy association of nearly 1,000 California wineries and affiliated businesses working at the state, national and international levels to enhance the environment to responsibly produce, promote and enjoy wine. California wineries generate $114 billion annually in economic activity to the U.S. economy and create 786,000 jobs across the country of which 325,000 are in California, bolstering economies through hospitality, taxes and tourism and enhancing communities through environmental sustainability.
Source: Wine Institute