Iowa Brewers Receive Tax Break Under Federal Tax Changes

Iowa Brewers Receive Tax Break Under Federal Tax Changes Photo: KSTP

January 28, 2018 04:05 PM

Iowa brewers are toasting the recently approved federal tax changes, saying a tax break targeting their industry could spur expansion and more profits.

Keg Creek Brewing is a large craft beer producer in southwest Iowa. Keg Creek is also one of the about 80 local breweries eligible for a tax break from President Donald Trump's tax plan that went into effect this month, the Des Moines Register reported .


The new "Craft Beverage Modernization and Tax Reform Act" approves a $3.50 barrel tax on the first 60,000 barrels made every year by breweries that produce fewer than 2 million barrels annually. Brewers saw a $7 barrel tax previously.

The Brewers Association found that Iowa produced about 61,000 barrels of craft beer in 2016, which means every ounce of state-brewed beer would benefit from the tax break.

RELATED: Paulsen Touts Tax Bill Benefits for Craft Beer Brewers

The Beer Institute said the cut should encourage $320 million in economic growth for the industry each year.

Keg Creek would have potentially saved around $5,200 with the tax break last year. This year, the brewers said they hope to increase production by 50 percent.

"(These) breweries . if they're not growing, they're dying. It is a small-margin industry," said John Bueltel, a co-founder of Keg Creek Brewing. "This tax has given us more money to continue that growth."

J. Wilson, head of the Iowa Brewers Guild, said the tax break won't turn a $5 pint into a $4 pint, but is a step toward permanent reform.

The tax is planned to sunset in 2019, which will restore the $7 barrel tax. Wilson said the tax break would see a real impact if it were extended beyond 2019. Wilson plans to lobby for a permanent cut.

"This is one of those things where you're excited but you've also got to be realistic and manage expectations," said Wilson.


The Associated Press

(Copyright 2018 by The Associated Press. All Rights Reserved.)


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