Local distilleries are benefiting from a recent tax code change that is allowing them to reinvest in their business.
The Craft Beverage and Tax Reform Modernization Act of 2017 cuts the federal “excise tax” on alcoholic beverages. While the tax is levied on everything from beer to wine and spirits. Hard liquor has taken the lion’s share of the tax.
Great Lakes Distillery in Milwaukee’s Walker’s Point was the first new distillery in the city since prohibition ended, and the owner is using his savings to expand the distillery.
“We're able to take some of that savings with the tax and spend that on raw ingredients and raw materials to produce future product,” said Guy Rehorst.
Rehorst believes he will see savings around $120,000 because the excise tax has decreased from approximately $2.14 a bottle to $0.42 for 2018/19.
The distillery has already put triple the amount of whiskey in barrels. More product means more raw materials like cranberries, cherries and grain. He’s also added two full-time employees and four part-time employees.
But there is an expiration date on the tax savings. At the end of 2019 the tax is expected to go back to its old rate.
The Distilled Spirits Council, a lobbying group out of Washington, D.C. is already working on getting the tax break extended. It has also slowed any additional hiring.
“Because there is an expiration date on it that of course gives us a little pause about what we can do. Where a lot of people would like to be able to hire more people there's also the idea that the if this doesn't get re-done in 2019, what do we do with the extra people" said Rehorst.