Excise tax on beer

The nominal excise tax on beer stands at $0.90 per gallon in 2025, unchanged since 2016 when the rate first reached this level. The federal statutory rate has remained at $18 per barrel for large brewers since the Omnibus Budget Reconciliation Act of 1990 (OBRA90), which doubled the rate from $9 per barrel effective January 1, 1991. The Tax Cuts and Jobs Act of 2017 introduced temporary reduced rates for small brewers, which Congress made permanent in 2020, lowering the effective federal tax burden for 99% of U.S. breweries by approximately 50%. State-level beer taxes have shown minimal aggregate movement in recent years, with the combined state contribution remaining stable at approximately $0.32 per gallon.

The nominal excise tax on beer has demonstrated remarkable stability over the past nine years, maintaining a constant rate of $0.90 per gallon since 2016. Between 2003 and 2015, the rate grew modestly from $0.86 to $0.89 per gallon, reflecting incremental state-level adjustments rather than federal policy changes. The federal component has remained frozen at $18 per barrel for over three decades for large brewers, representing one of the longest periods without adjustment to the top statutory rate in the history of federal beer taxation. Small brewers benefited from rate reductions implemented in 2018, but these changes primarily affected effective tax rates for smaller producers rather than the statutory maximum rate that dominates the aggregate calculation.

State-level policy changes have been minimal during the five-year period from 2020 to 2025, with few jurisdictions implementing significant rate increases. Notable exceptions include Arkansas, North Dakota, and Utah, which increased rates in 2025, while Connecticut and Kentucky implemented reductions. However, these changes have not materially affected the national aggregate rate, which remained at $0.90 per gallon throughout the period. The compound annual growth rate of zero percent during this period reflects legislative inertia at both federal and state levels. Taxes now constitute approximately 40% of the retail price consumers pay for beer, with the excise tax burden split between federal and state jurisdictions.