Raw: [Different layers of taxation on production and distribution combine to make up about 40 percent of the retail price of beer.]
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Beer. For many Americans, the thought of beer conjures warm memories—summer grilling, a cheers with old friends, or a cold drink at the end of a long day.
Beer taxes, however, are enough to squash those positive vibes. In the United States, taxes are the single most expensive ingredient in beer. State and local beer taxes add more to the final price of beer than the labor and raw materials combined. One report found that the different layers of taxation on production and distribution combine to make up about 40 percent of the retail price of beer. So, as you share one with your friends and family, how does your state compare?
The United States collects an 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.
on fermented malt beverages at the federal level (ranging from $0.11 to $0.58 per gallon based on production, location, and quantity). At the state level, all 50 states and the District of Columbia collect their own beer excise taxes, added on to any other retail sales taxes from state, and sometimes municipal, governments.
The map below shows the state beer excise 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.
rates in all 50 states and the District of Columbia. Rates range from as low as $0.02 per gallon in Wyoming to as high as $1.29 per gallon in Tennessee. Missouri and Wisconsin tie for second lowest at $0.06 per gallon. Alaska charges the second-highest beer tax rate at $1.07 per gallon, followed by Kentucky and Hawaii at $0.93 per gallon. Figures on the map below are rounded to the nearest cent, but ranks reflect unrounded figures.
The per-gallon rate shown on the map reflects the excise tax for a 4.7 percent alcohol by volume (ABV) beer in a 12-ounce container. Sixteen states have beer excise tax rates that vary based on alcohol content, place of production, size of container, or place purchased. For example, in Idaho, beer containing more than 4 percent ABV is considered “strong beer” and is taxed like wine at $0.45 per gallon. In Virginia, the per-bottle rate varies for bottles that exceed 7- and 12-ounce thresholds.
State excise taxes are often levied on the manufacturer, wholesaler, or retailer of beer. The states collect these excise taxes according to the quantity of beer sold (usually expressed as a rate of dollars per gallon). In many instances, consumers won’t see the tax as an additional excise tax at checkout; the tax will already be priced into the retailer’s sales price.
Many states also generate revenue by collecting license fees from beer distributors. Others manipulate the price of beer by setting statewide minimum prices.
Beer exists in a complex tax and regulatory landscape. Understanding this taxation framework is crucial for both consumers and policymakers as public policy evolves for one of America’s most cherished beverages.
State Beer Excise Tax Rates (Dollars per Gallon) As of January 1, 2024
StateTax RateRank
Alabama (a)$0.538
Alaska$1.072
Arizona$0.1636
Arkansas (b, c)$0.3518
California$0.2030
Colorado$0.0846
Connecticut$0.2427
Delaware$0.2624
District of Columbia (b)$0.795
Florida (d)$0.489
Georgia (a, d)$0.489
Hawaii (d)$0.934
Idaho (d)$0.1538
Illinois$0.2328
Indiana$0.1243
Iowa (d)$0.1932
Kansas$0.1833
Kentucky (e)$0.933
Louisiana (d)$0.4015
Maine$0.3519
Maryland (b)$0.607
Massachusetts$0.1144
Michigan$0.2029
Minnesota (d, b)$0.4711
Mississippi$0.4312
Missouri$0.0649
Montana$0.1440
Nebraska$0.3120
Nevada$0.1636
New Hampshire$0.3021
New Jersey$0.1242
New Mexico$0.4114
New York$0.1439
North Carolina (d)$0.626
North Dakota (b, d)$0.4017
Ohio (d)$0.1834
Oklahoma (d)$0.4015
Oregon$0.0845
Pennsylvania$0.0846
Rhode Island (c)$0.1241
South Carolina$0.775
South Dakota$0.2722
Tennessee (e)$1.291
Texas (d)$0.1931
Utah (d)$0.4113
Vermont$0.2723
Virginia (d)$0.2626
Washington (d)$0.2625
West Virginia$0.1835
Wisconsin (d)$0.0648
Wyoming$0.0250
(a) Statewide local rates exist in Alabama ($0.52/gallon) and Georgia ($0.53/gallon).
(b) Includes sales taxes specific to alcoholic beverages.
(c) Includes case fees and/or bottle fees which may vary with the size of container.
(d) Different rates also applicable according to alcohol content, place of production, size of container, or place purchased (on- or off-premise or onboard airlines).
(e) Includes the wholesale tax rate in Kentucky (10%) and Tennessee ($35.60 per barrel), converted into a gallonage excise tax rate.
Note: Rates are those applicable to off-premise sales of 4.7% alcohol by volume (ABV) beer in 12-ounce containers that have been imported from outside the state. At the federal level, beer is subject to differing tax rates. Small domestic brewers are taxed between $0.11/gallon and $0.516/gallon. All other brewers are taxed at rates between $0.516/gallon and $0.58/gallon. D.C.’s rank does not affect states’ ranks, but the figure in parentheses indicates where it would rank if included.
Sources: Distilled Spirits Council of the United States; Alcohol and Tobacco Tax and Trade Bureau; state revenue departments.
Related: Distilled Spirits Taxes by State
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TopicsAlcohol TaxesBusiness Consumption TaxesBusiness TaxesDataExcise TaxesIndividual and Consumption Taxes
TagsTags:Beer 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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