Raw: [Newer products like spirits-based hard seltzers and ready-to-drink cocktails have fueled growth, while also blurring the lines of a categorical tax system. The result has been a spirited competition throughout the alcohol industry for market share, including calls to reform tax policy.]
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Distilled spirits lead American alcohol sales. In 2023, spirits sales (42 percent of market share) outpaced beer sales (41.9 percent of market share) for the second straight year. Newer products like spirits-based hard seltzers and ready-to-drink cocktails have fueled growth, while also blurring the lines of a categorical tax system. The result has been a spirited competition throughout the alcohol industry for market share, including calls to reform taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.
policy.
Distilled spirits face the stiffest tax rates of all alcoholic beverages. These high tax rates are a combination of greater alcohol content in spirits than wine or beer and higher tax rates applied per alcohol content to spirits. A one-ounce shot of 40 percent alcohol-content spirit (0.4 oz of alcohol) carries greater taxes than an identical 12-ounce beer with 4.8 percent alcohol content (0.4 oz of alcohol).
Across states, a variety of policies are applied to the sale of distilled spirits. Data for this map come from the Distilled Spirits Council of the United States (DISCUS). To allow for comparability across states, DISCUS uses a methodology of estimating tax rates that combines the various ways in which spirits are taxed and sold.
In 17 states, the government operates a monopoly of state-controlled liquor stores. In these control states, the government can leverage its market power to artificially inflate prices in lieu of levying a formal tax. The data in the map represent the implied excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections.
rates in those states with government monopoly sales.
These data also include additional fees and sales taxes applied to spirits in addition to legislated excise taxes. The other taxes and fees include case and bottle fees, special sales taxes on spirits, wholesale taxes, and retail and distributor license fees. Distilled spirits tax rates may also differ within states according to alcohol content, place of production, or place purchased (such as on- or off-premises or onboard airlines).
Across states, Washington state levies the greatest excise tax rate on distilled spirits, at $36.55 per gallon. Rounding out the five stiffest rates are Oregon ($22.85), Virginia ($22.04), Alabama ($21.67), and North Carolina (16.62).
Distilled spirits are taxed the least in Wyoming and New Hampshire. These two control states gain revenue directly from alcohol sales through government-run stores and have set prices low enough that they are comparable to buying spirits without taxes. Missouri taxes are the next lightest at $2.00 a gallon, followed by Colorado ($2.28), and Texas ($2.40).
The disparity in tax rates across states underscores the complex tax and regulatory environment surrounding distilled spirits. As the product landscape continues to evolve, and calls for policy reform intensify, principled public policy changes should support both industry growth and responsible consumption with neutral, simple, and transparent taxes.
Distilled Spirits Taxes by State, 2024State Spirits Excise Tax Rates (Dollars per Gallon) As of January 1, 2024
StateRateRankNotes
Alabama$21.694(a)
Alaska$12.809(b)
Arizona$3.0043
Arkansas$8.0120(c,d)
California$3.3040(b)
Colorado$2.2847
Connecticut$5.9426(b)
Delaware$4.5034(b)
District of Columbia (DC)
$6.68(22)(d)
Florida$6.5022(b)
Georgia$3.7937(b)
Hawaii$5.9825
Idaho$12.1510(a)
Illinois$8.5516(b)
Indiana$2.6844(b)
Iowa$14.107(a)
Kansas$2.5045
Kentucky$9.2514(e)
Louisiana$3.0342(b)
Maine$11.9611(a)
Maryland$5.4629(b,d)
Massachusetts$4.0536(b)
Michigan$13.578(a)
Minnesota$8.7015(c,d)
Mississippi$8.5117(a)
Missouri$2.0048
Montana$10.5713(a)
Nebraska$3.7538
Nevada$3.6039(b)
New Hampshire—-(a)
New Jersey$5.5028
New Mexico$6.0624
New York$6.4423(b)
North Carolina$16.405(a)
North Dakota$4.6833(b,d)
Ohio$11.3812(a)
Oklahoma$5.5627
Oregon$22.862(a)
Pennsylvania$7.4121(a)
Rhode Island$5.4031(b)
South Carolina$5.4230(c)
South Dakota$4.8732(b,d)
Tennessee$4.4635(c)
Texas$2.4046(b)
Utah$15.926(a)
Vermont$8.3918(a)
Virginia$22.063(a)
Washington$36.551(d,f)
West Virginia$8.3219(a)
Wisconsin$3.2541
Wyoming—-(a)
(a) Control states, where the government controls all sales. Products can be subject to ad valorem mark-up as well as excise taxes.
(b) Different rates also applicable according to alcohol content, place of production, size of container, or place purchased (on- or off-premise or on board airlines).
(c) Includes case fees and/or bottle fees which may vary with size of container.
(d) Includes sales taxes specific to alcoholic beverages.
(e) Includes the wholesale tax rate of 11%, converted to a gallonage excise tax rate.
(f) Includes the retail (17%) and distributor (5%/10%) license fees, converted into a gallonage excise tax rate.
Note: Rates are those applicable to off-premise sales of 40% alcohol by volume (a.b.v.) distilled spirits in 750ml containers. At the federal level, spirits are subject to a tiered tax system. Federal rates are $2.70 per proof gallon on the first 100,000 gallons per calendar year, $13.34/proof gallon for more than 100,000 gallons but less than 22.23 million and $13.50/proof gallon for more than 22.23 million gallons. D.C.’s rank does not affect states’ ranks, but the figure in parentheses indicates where it would rank if included.
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Previous Versions
DataJune 13, 2023May 23, 2024
Distilled Spirits Taxes by State, 20234 min read
DataJune 16, 2021May 23, 2024
Distilled Spirits Taxes by State, 20213 min read
DataJune 17, 2020May 23, 2024
Distilled Spirits Taxes by State, 20202 min read
DataJune 19, 2019May 23, 2024
Distilled Spirits Taxes by State, 20193 min read
DataMarch 22, 2018May 23, 2024
Distilled Spirits Taxes by State, 20182 min read
DataJune 22, 2017May 23, 2024
Distilled Spirits Taxes by State, 20172 min read
DataJune 2, 2016May 23, 2024
Distilled Spirits Taxes by State, 20162 min read
DataJuly 2, 2015May 23, 2024
Distilled Spirits Taxes by State, 20152 min read
DataFebruary 13, 2014May 23, 2024
Distilled Spirits Taxes by State, 20142 min read
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TopicsAlcohol TaxesDataExcise TaxesIndividual and Consumption Taxes
TagsTags:Distilled Spirits Taxes
LocationsLocations:AlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeTexasThe District of ColumbiaUnited StatesUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyoming
Authors
ExpertAdam HofferDirector of Excise Tax Policy
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