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    Tax Policy on Alcohol
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    Tax Policy on Alcohol

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    Tax Policy on Alcohol
    USA

    The below version control table serves to document all updates made to the report. The purpose is to ensure the information is always accurate and up-to-date.

    Version Number
    Content Creation Date
    		Publishing DateSection(s) Updated & Reason(s) for Update
    V0
    26 June 2024
    		27 June 2024N/A (new report)
    V1
    30 May 2025
    		04 June 2025
    		All content has been reviewed and is still accurate. No updates were needed.
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    1. General Requirements on Tax Policy for Alcohol

    Alcoholic beverages are not taxed uniformly: beer (including other malt beverages and most hard seltzers) and wine (including ciders) are taxed by volume, whereas distilled spirits are taxed by alcohol content. After accounting for alcohol by volume, the alcohol content of beer and wine is taxed at a lower rate than the alcohol content of distilled spirits. 

    Several factors affect how specific alcoholic beverages are taxed. Tax rates are generally lower for quantities of alcoholic beverages below certain thresholds for producers of all sizes. [1]

    2. Specific Requirements per Product (Whisky, around 45% Alcohol)

    Any business located in the US that sells distilled spirits produced in or imported into the United States is required to pay a tax on the beverage based upon the alcohol content, expressed as ‘Proof Gallons’. 

    A ‘Proof Gallon’ is defined as [2]: 

    With

    In other words, a Gallon is defined as a unit of liquid measure that equals 3.79 liters.

    The alcoholic beverage business in the USA can be complex, with importers, distributors, and retail companies all involved, and in some states, the retailers are state-owned. An importer can be the distributor, but not always.

    For imported alcoholic beverages, it is the importer that pays the tax upon importation, not the foreign producer [3]:

    The current tax rate for distilled spirits, which includes whiskey, is USD 13.5 /proof gallon [4]:

    A DSP is a distilled spirits producer that can be located anywhere in the world.

    There is the potential for a considerable reduction in the tax on the first 100,000 proof gallons if the manufacturer assigns them to the importer.

    3. Other Rules

    27 CFR 27.48 [5] provides the instructions that an importer of alcoholic beverages must follow with respect to tax payment.

    Conclusion
    1. In the United States, the implementation and administration of beverage alcohol taxation is complex with both the Tax and Trade Bureau on the Customs and Border Protection Agency involved in the collection of taxes. 
    2. Whiskey exporter – Exporters of alcoholic beverages, including whiskey exporters, should engage with a US-based importer of alcoholic beverages which is staffed to manage the complexities associated with tariffs, taxes, and distribution.

    4. References

    1. Congressional Budget Office. Note dated December 7, 2022, on “Increase All Taxes on Alcoholic Beverages to $16 per Proof Gallon and Index Them for Inflation”

    https://www.cbo.gov/budget-options/58705#:~:text=A%20tax%20rate%20of%20%2413.50,specific%20alcoholic%20beverages%20are%20taxed

    2. 27 CFR 19.1 “Proof gallon”

    https://www.ecfr.gov/current/title-27/part-19#p-19.1(Proof%20gallon) 

    3. 27 CFR 27.40

    https://www.ecfr.gov/current/title-27/section-27.40 

    4. ALCOHOL – Tax Rates for Calendar Years 2018 to Present

    https://www.ttb.gov/taxes/tax-audit/taxes-and-filing/tax-rates#ds 

    5. 27 CFR 27.48 Imported distilled spirits, wines, and beer

    https://www.ecfr.gov/current/title-27/section-27.48 


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