Louisiana craft brewers set for tax windfall after carve-out in GOP tax bill

    Louisiana’s craft breweries are preparing for a windfall next year when a provision that was folded into the recently-passed GOP tax bill goes into effect, cutting in half the excise tax on beer for many producers.

    The Tax Cuts and Jobs Act, which also provides large tax cuts for corporations and which critics say is tilted unfairly toward the wealthy, reduces the excise tax on beer from $7 to $3.50 per barrel for the first 60,000 barrels produced. A barrel is roughly 31 gallons.

    That’s especially good news for Louisiana’s burgeoning industry, where almost all the craft breweries produce less than 60,000 barrels per year and will feel the full weight of the tax cut. Of the nearly 30 breweries that are members of the Louisiana Craft Brewers Guild, only Abita Brewing Company does more production, though it will also get the benefit for its first 60,000 barrels.
    “That’s going to be huge,” says Cary Koch, director of the Louisiana Craft Brewers Guild.  “We’re taking it as the breweries’ chance to make the most of this and prove this is actually beneficial to our state and our nation that with our tax cut we will increase jobs and we will increase production.”

    Louisiana’s craft brewing industry—worth $740 million a year collectively—has in recent years made moves to catch up to the rest of the country, more than doubling in size in the past five years. Still, despite its penchant for alcohol, Louisiana only ranks 48th in the country for number of breweries per capita. The industry has experienced growing pains and at times clashed with state regulators, and Koch says he’s working on getting more favorable rules. Several breweries are currently in the pipeline.

    Excluding Abita, the average production of breweries in the guild is 3,000 barrels per year, Koch says, meaning the industry here skews smaller. There are around 40 breweries total in the state, and all those who produce less than 2 million barrels a year will benefit from the cut. Larger brewers, which have a higher excise tax, will also see a tax break, and the national Brewers Association says in total, breweries will save $142 million per year under the new scheme.

    Southern Craft Brewing Co. opened nearly two years ago and recently added a canned beer line. Owner Joe Picou says he has plans for expansions in the next two years—into several new markets along with growing his facility. He currently produces less than 1,000 barrels a year and says the tax cut will be a boon.

    “In the brewing business in addition to your normal business licenses and permits and taxes … we also have to have these additional licenses and permits for alcohol, and we also have to pay excise taxes as well,” he says. “(The cut) is a huge benefit to small breweries’ tax burden.”

    Tin Roof Brewing Co., which owner Jacob Talley says produced around 9,000 to 10,000 barrels last year, is fresh off a major expansion to its facilities. With the new infusion of cash, Talley says he hopes to invest more in the company.
    “The money we do save that’ll help us put more resources back into the brewery,” he says, “Whether that’s better benefits for the employees, better equipment, adding manpower.”

    —Sam Karlin