Federal tax cuts impact local microbreweries

GOP tax plan will save microbreweries money (December 21, 2017)

The GOP tax bill that passed this week comes with cost-savings for local microbreweries, cutting in half the federal tax they have to pay on each barrel of beer they produce.

Microbreweries currently have to pay $7 per barrel in excise tax. The approved tax reform plan cuts that down to $3.50 a barrel.

Ryan Graham is co-owner and brewmaster of Track 7 Brewing, one of Sacramento's largest microbreweries.

"I think it's going to help the whole industry," Graham said, of the reduced excise tax. "Obviously, the bigger breweries are experiencing some of the most significant rise in costs along the way, both in terms of labor and raw goods costs, so anything at that level will help them stay and remain competitive."

Track 7, founded six years ago, will see more cost-savings than some of the region's smaller breweries.

"Our first year of business we did 350 barrels of beer. This current year we're projecting to do 18,000 barrels of brewed beer, 16,000 barrels of packaged beer," Graham said.

He projects the tax cut will save them some $40,000 next year.

"We'll have some rising healthcare premiums this year. We're one of the fortunate people that are able to provide healthcare for our employees, and so we'll have to offset some of that," Graham said. "We'll probably use some of that as well, you know, in additional capacity and capital expansion."

In 2018, Track 7 plans on opening a restaurant and taproom in East Sacramento in the spring and a taproom and event space in Roseville's Old Town, Graham said.

But many local breweries aren't that big.

Ilya Faibushevich is director of brewing operations at Yolo Brewing Company in West Sacramento.

"Yolo Brewing produces about 1,000 barrels a year, commercially," he told ABC10.

The tax cut will save Yolo Brewing only about $3,500 per year.

"Not a big chunk of money, but it is a chunk of money that we will certainly appreciate," Faibushevich said. "We can buy maybe a new-to-us used fermenter that'll help us ease a lot of our production constraints."

While it's not a game-changing tax cut, it will free up cash to be spent elsewhere.

"So it'll be basically like a nice Christmas bonus," Faibushevich said.

Currently, this tax cut is set to expire in two years, unless Congress decides to extend it.

© 2018 KXTV-TV


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