New tax law will make brewing beer cheaper for local breweries - KWWL - Eastern Iowa Breaking News, Weather, Closings

New tax law will make brewing beer cheaper for local breweries

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That $1.5 trillion dollar tax bill Congress passed last month could also have an effect on the Eastern Iowa brewery scene.

On December 20, 2017, Congress passed the Tax Cuts and Jobs Act. Under that is the Craft Beverage and Tax Reform Act, which stands to cut federal taxes for small breweries by half. It'll also cut taxes for wineries and distilleries.

Under the bill, the tax on beer will go from $7 per barrel to $3.50 for the first 60,000 barrels for brewers that produce less than 2 million barrels a year. 

Breweries like Iowa Brewing Co. in Cedar Rapids said it's a huge break for them.

In 2017, Iowa Brewing Co. made just over 1,000 barrels. That would have been a savings of close to $3,500. However, in 2018, Iowa Brewing Co. is setting their bar higher as they close in on two years being in business. This year, they hope to make 4,000 barrels, which mean a savings of $14,000.

"That's a part-time job," Iowa Brewing Co. Business Manager, Ashley Felts, said. "It's opening employment options here within the brewery. One of the biggest things I'm excited about is promotion opportunity for expenses. Just getting your beer into a restaurant or on a shelf is one thing, but being able to support those local businesses and putting us out there and saying, 'hey, we're here. We're local. Support us.' That's usually a lot of money people don't take into account."

The Brewers Association said in a release that the tax cut will allow America's small brewers to reinvest in their businesses, to expand, and hire more workers.

"Small brewers are the growing engine in this industry, and our expectation is that CBMTRA will spur additional growth in the months and years ahead," the association wrote.

Over the last decade, breweries have exploded across the country. In 2000, there were just 1,566, compared to the 5,301 by 2016.

The tax break is only effective through the end of 2019, but breweries like Iowa Brewing Co. hope it's here to stay.

"If they understood what this does for local small businesses to have opportunities like the big guys, and I think we all know who those big guys are out there in the beer world. For them to see a local craft brewery, and we're able to get those prices to the big guys, people might start supporting local and putting money back into the pockets back into the neighborhoods that are supporting the city," Felts said.

Small distilleries, as would big brewers, also have a lot to gain under the new tax law. For them, it's $13.50 a gallon in taxes. It's now down to just $2.70 a gallon.

For big breweries, the first 6 million barrels will reduce to $16 a barrel, from $18. After that 6 million, the rate will go back to $18 a barrel.

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