By Illinois Radio Network
SPRINGFIELD – A key tax break for small brewers in Illinois is set to expire at the end of the year.
The 2017 federal tax reform law included a provision that cut the federal excise tax per barrel of beer from $7 to $3.50. That applied to the first 60,000 barrels produced by any brewery that made less than 2 million barrels per year. If no action is taken in Washington, that rate will spring back at the end of 2019.
Danielle D’Alessandro, executive director at Illinois Craft Brewers Guild, said the lower rate has made a real difference for Illinois small brewers.
“It’s led to the hiring more employees, D’Alessandro said. “We had one brewery that noted in a survey that it was looking to hire six new employees in 2018 as a direct result of the reduction in the excise tax.”
According to the Brewers Association, craft brewers supported 150,000 jobs across the country in 2018, an 11 percent increase from the year before. The number of small, craft breweries in the U.S. has nearly doubled since 2014.
“Here in Illinois, a large regional brewer was able to double their production [due to the tax cut], hiring more staff and purchasing more equipment,” D’Alessandro said. “So the federal government received the same amount of tax they would have otherwise, but that resulted in that company being able to grow in that community.”
D’Alessandro said the uncertainty about next year’s rate has left some small brewers holding off on hiring or making business decisions. She said if the tax rate doubles to its previous level, it could hold back the growth of the craft brewing industry in Illinois.
“In ten years, we’ve seen a 440 percent increase in the number of breweries,” D’Alessandro said. “I would say in the past two or three years, we’ve gone from around 200 breweries to now more than 270.”
A number of lawmakers in Washington continue to work on a bill to modernize rules and regulations regarding the craft beverage industry, which would include a permanent extension of the current tax rate. D’Alessandro said there’s another way the tax relief could continue.
“We’re hopeful that if that doesn’t pass by the end of the year, the excise tax will be.
included in a list of extenders,” D’Alessandro said. “That would mean for at least another year, that tax cut would remain in place.”
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