For those unfamiliar with the Craft Beverage Modernization and Tax Reform Act, the recently passed tax reform applying to alcoholic beverage manufacturers, the short of it is that the legislation offers two years of heavy relief from federal excise taxes applied to one of the most severely taxed industries in the US. So, what are craft brewers, distillers, and vintners going to do with it? For most, the word is grow.

The tax breaks will translate into substantial annual savings for these craft beverage makers, between $20,000 and $100,000 to be more precise, and allow them to hire more staff, expand operations, and invest in marketing to build their brands.

Brewer Benefits

For many of the nation’s thousands of small breweries, the tax break of $3.50, effectively halving the previous $7.00, on the first 60,000 barrels(BBL) produced for domestic breweries producing less than 2 million BBL annually, will be a desperately needed lifeline. To put things into perspective, that $7 has been anywhere from 15 percent to 25 percent of the total cost of that BBL.

a picture of two pint glasses filled with beer.

For many of the nation’s thousands of small breweries, the tax break of $3.50 effectively halves the previous $7.00.

Competing with the likes of D. G. Yuengling & Son, Inc, Sierra Nevada, New Belgium, and Boston Beer Co., mom-and-pop and Main-street brew operations have had a hard time coming up in an industry that has seen improved performance year on year but is at the same time contracting. An extra $20,000 going towards a brewpub can provide another part-time employee, new vats, advertising, and a host of other potentially powerful tools to aid expansion. Some operations will transcend the modest manufacturing operations to the regional scale and evolve into full-blown enterprises as a result. With new enterprise comes new concerns, including accounting, production, distribution, and, perhaps the most significant hurdle of even the most robust ERP solutions, tax responsibilities.

Distiller Details

The same positive outlook is true of the States’ 1,500 craft distillers who are already seeing big benefits from the change. The tax cuts bring federal excise taxes for distillers down significantly from $13.50 to $2.70 per proof gallon, applying to the first 100,000 gallons per year for a two-year period. Used to its maximum benefit, the savings translates to $2.16 million. With taxes on distilled spirits among the highest in the US, reaching more than 50 percent of a product’s purchase price in many cases, the relief is more than welcome from the craft distillers of America.

a picture of two glasses of whiskey, neat.

Used to maximum benefit, the savings in taxes translate to $2.16 million annually for craft distillers.

The industry workforce has grown to 20,000 with a cumulative investment total of $600 million in the last decade alone. Compare that to Jack Daniel’s Distilleries, which blows through that 100,000-gallon tax break in one day of production, and the future is only looking brighter for the craft distillers of America.

Vintners Toast Approval

Wine is another beneficiary of the latest excise tax reform, albeit with a slightly more complicated structure. Wine is taxed based on alcohol content with new rates applied to those containing 16 percent or less of alcohol, 16 percent to 21 percent, and 21 percent to 24 percent. These categories are taxed 21-cents, 31-cents, and 62-cents per bottle respectively. The benefits are a bit easier to see with a broader view. Let’s first take the initial 30,000 gallons a winery produces. Each of these barrels receives a $1 credit per gallon. The following 100,000 gallons receive a 90-cent tax credit and a 53.5-cent credit is applied to the next 620,000 gallons. All wine produced after that is taxed at the standard rate. The new tax rates are a far cry better than those previously afforded to the small wineries of America and when used to their fullest potential can provide craft vintners more than $450,000 in tax credits.

a picture of two glasses of white wine against a sunset backdrop.

When used to their fullest potential, the tax breaks can provide craft vintners more than $450,000 in tax credits.

With the results of the tax reform already taking effect, it’s not hard to see why the craft beverage manufacturers of America are celebrating. This reduction of excise taxes will afford the burgeoning craft beverage industry considerable capacity for expansion over the next two years and we can’t wait to see where the influx of capital will take up and coming enterprises.

About Encompass Solutions

Encompass Solutions is a business and software consulting firm that specializes in ERP systems, EDI, and Managed Services support for Manufacturers and Distributors. Serving small and medium-sized businesses since 2001, Encompass modernizes operations and automates processes for hundreds of customers across the globe. Whether undertaking full-scale implementation, integration, and renovation of existing systems, Encompass provides a specialized approach to every client’s needs. By identifying customer requirements and addressing them with the right solutions, we ensure our clients are equipped to match the pace of Industry.


Following the most recent tax reform legislation passed by the federal government, manufacturers of all sizes have enjoyed success in their sectors. This week, White House Press Secretary Sarah Sanders delivered a daily press brief that highlighted how policies outlined in the new tax law have had a positive impact on businesses. One such success story came from Pittsburg, PA’s H&K Equipment.

A picture of literature that details economics and taxes.

Recently Passed US Tax Legislation Has Had A Favorable Impact On The Nation’s Manufacturers.

H&K Equipment’s Story

The company was founded in 1983 by three entrepreneurs and run out of a garage. Today the company has grown to include 200 employees providing services in selling, renting, and servicing lift trucks, container handlers, railcar movers, personnel carriers, yard trucks, and industrial sweeping and scrubbing equipment.

According to company representatives, 2017 had been the company’s best year to date. The success has been attributed directly to the White House’s position on economic and job growth. Tax cuts, in particular, allowed the company to expense new equipment they acquired within the same year and return 50% more on investments made into the company when compared to 2016. According to Sanders, “When they buy more trucks and equipment for their rental fleet, they hire more technicians to service them, buy more service vehicles to transport those techs from customer site to customer site, and buy more parts from their suppliers to keep the rental fleet running. All of this economic activity spurred by the tax bill will result in more jobs, higher wages, and a brighter future.”

A picture of H&K Equipment Headquarters

H&K Equipment’s Success Story Is Just One Of Many Following The Recently Passed US Tax Legislation. Photo Provided By: H&K Equipment

There are currently 566,000 employed by the manufacturing industry in Pennsylvania alone, with an average annual salary of $72,500 for workers. The state generates $85.13 billion according to a 2015 report on manufacturing output. These growth- and worker-focused policies coming from the current US Administration are leading to big benefits for manufacturing outfits in Pennsylvania and across the country. Beyond mid-sized operators like H&K, conglomerates, including AT&T, Boeing, and Waste Management, have all attributed increased commerce and benefits to employees as results of tax reform. 2018 is expected to usher in further progress in US manufacturing investment, expansion, and employment.

US Manufacturing And Production Make Gains In Q4 Of 2017

2017 was a booming year for manufacturing with overall production rising for a fourth consecutive month in December. That resulted in a 2.4% increase year-over-year according to the Federal Reserve. December’s gains dripped slightly from November’s numbers, but the trend gleaned optimism from industry experts and professionals alike. The increase in production for 2017 has been the highest gain since 2014.

A picture of workers and equipment in a manufacturing facility

Manufacturers Big And Small Are Reaping The Benefits Of More Favorable Tax Laws that Facilitate Expansion In Investment And Hiring.

The report from the Federal Reserve released this month pulled data from industrial production, manufacturing, durable goods, and nondurable goods. The biggest gains came from industrial production, which jumped 1.6% from September to October, and nondurable goods, which enjoyed the lion’s share of progress in recovering 2.5% from a September low to its highest show in October.

In related news, overall industrial production was up nearly 1% in December, totaling a 3.6% rise for 2017. Peripherally, utilities and mining rose 5.6% and 1.6%, respectively.

About Encompass Solutions

Encompass Solutions is a business and software consulting firm that specializes in ERP systems, EDI, and Managed Services support for Manufacturers and Distributors. Serving small and medium-sized businesses since 2001, Encompass modernizes operations and automates processes for hundreds of customers across the globe. Whether undertaking full-scale implementation, integration, and renovation of existing systems, Encompass provides a specialized approach to every client’s needs. By identifying customer requirements and addressing them with the right solutions, we ensure our clients are equipped to match the pace of Industry.