Cider Tax News
Federal alcohol excise tax reform is included in the recently passed Tax Cuts and Jobs Act. Beer, wine, spirits and cider all benefit. What’s in it for cider? The threshold for which a cider maker receives the “Small Producer Tax Credit” has been significantly broadened. Previously, you could only receive this tax credit on the first 100,000 gallons produced and only if you made less than 250,000 gallons a year. But a new credit structure has been developed for both the hard cider tax rate and the wine tax rate (which is the rate fruit cider currently falls under). The following language is from Wine America. If your cider does not qualify for the hard cider tax rate, this structure applies to your product.
“The bill will save all wineries, regardless of size, significant money through an excise tax credit mechanism which reduces the effective rate. For example, while the federal excise tax on table wine will remain unchanged at $1.07 per gallon, there will be a new tax credit of $1.00 on the first 30,000 gallons produced, making the effective tax rate $0.07 (seven cents) per gallon. The tax credit on the next 100,000 gallons produced is $0.90, and between 130,000 and 750,000 gallons produced the tax credit will be $0.535.”
For hard cider, the bill will save cideries money through a similar excise tax credit mechanism. While the federal excise tax on hard cider will remain unchanged at $0.226 per gallon, there will be a new tax credit of $0.062 on the first 30,000 gallons produced, making the effective tax rate $0.164 per gallon. The tax credit on the next 100,000 gallons produced is $0.056, and between 130,000 and 750,000 gallons produced the tax credit will be $0.033.”
This reform was passed on a temporary basis. It will expire on December 31, 2019. American Cider Association is looking at ways to increase our presence in the coalition working to make this permanent and to represent the interests of cider in this process moving forward.
Once the President signs this current version into law, it becomes effective on January 1. That does not give the TTB time to create the regulatory process to implement this law. Cideries will likely receive retroactive tax credits after the regulations are created.
For more information about this law, please visit Wine America’s site, or contact Michelle McGrath at michelle@ciderassociation.org.
American Cider Association gained non-profit status in 2014. Right at the get-go, we adopted a structure to support the diversity of our membership
By Bruce Nissen, Board President, bruce@ldbbeverage.com
American Cider Association gained non-profit status in 2014. Right at the get-go, we adopted a structure to support the diversity of our membership:
(1) Tiered membership levels based on annual production.
(2) Board seats carved out for geographical regions and for large producers.
Our board functions with 11 seats: five are regional chairs, three are at-large, and three are set aside for large producers. These carved-out seats simultaneously provide for the inclusion of large producers and keep their influence in balance. Until now, the large producer benchmark has been a half million gallons a year. 500,000 gallons of cider was a lot for even our most widely-distributed members in 2014.
Today, our industry has changed. You are expanding distribution, adding production lines, and entering new markets. It’s great news for the cider industry. To reflect this phenomenal growth, we are updating our benchmark for large producers. Moving forward, the three large producer board seats will be for cideries making more than a million gallons a year.
The diversity of American Cider Association’s membership is our greatest strength. We have cideries of all shapes and sizes, and we work hard to make sure our programming supports all your needs. For example, we will have an entire track for orchard-based heritage cider producers at CiderCon 2018.
It pleases us to need to respond to your growth. Feel free to reach out to me with any questions, and thank you for growing with us!
By the way, if you are producing 500,000-999,999 gallons a year, your membership fee will be lower as a result of this change. Good news for you!