Federal Excise Tax Cut that Helped Spur Distillery Growth Across U.S. Set to Expire

The FET: AKA, a key soon-to-expire component of the Tax Cuts and Jobs Act of 2017 that has serious consequences for local distilleries.

For the past six years LYON Distilling has made remarkable American rum & whiskey here on the Eastern Shore, hired and trained dozens of people, delighted thousands of visitors, and become a community partner to local organizations through continued support and sustainable philanthropy.

I am writing to raise the awareness of a key issue facing small, craft distillers across the U.S. If Congress does not act by December 31, 2019, Federal Excise Taxes on small distillers will rise by 400%. We are urging the U.S. Congress to act as soon as possible to prevent this. 

As many of you know, America’s craft distilling industry has gone from “emerging” to “exploding” in the last decade. When we opened LYON there were just over 100 craft distilleries across the country, and only one operating in Maryland. Today, there are over 2,000, with nearly 30 in Maryland. The craft spirits industry is experiencing a true renaissance – spirit manufacturing has returned to small towns and cities across America, and customers are more educated, interested, and invested in, local, innovative spirits.   

Unfortunately for distillers and consumers, the Federal Excise Tax imposed on craft spirits has been disproportionately high for years. In 2017, for the first time in recent history, Congress lowered the Federal Excise Tax for craft distillers. This effectively provided parity with the craft beer and wine industries that enjoyed a lower tax based on their small size as well, which in turn led to the incredible boom in craft beers and boutique wineries. 

The lower tax is indeed having the impact that Congress envisioned it would. Small distilleries like us are re-investing in their businesses, hiring new employees, purchasing American-made equipment, and seeking out American agriculture products. LYON has invested in new equipment to expand production 10x over, increased our physical footprint to nearly double the size of our original space, launched distribution in 5 states, and grown a team of 12 employees.

This provision has sweeping bi-partisan support – with 323 House Members & 73 Senators co-sponsoring legislation to make this a permanent feature of the tax code.  We reiterate our call for Congress to act by the end of 2019 to keep the lower tax rate in place for craft distillers and to allow the spirits renaissance to continue!

*The proposed legislation, H.R. 1175 would make the existing federal excise tax cuts permanent for the alcohol industry. The companion legislation is Senate Bill 362.

**Don’t know your representative? Find them here: https://www.house.gov/representatives/find-your-representative
You can send an email, or place a call to their office, simply urge them to support H.R. 1175 and make the existing federal excise tax cuts permanent for the alcohol industry!