Small Distilleries React To Proposed Tax Cut Legislation

A new proposed law could be a big help to small craft distilleries.

Last week, Senator Gary Peters introduced the distillery excise tax reform.

If passed, it would reduce federal taxes for distilleries by more than $10 per proof gallon on the first 100,000 gallons they produce per year.

“It will help us grow and help us put away more product,” said Jared Rapp, Traverse City Whiskey Company Co-Owner. 

That’s all any business wants to do, but small distilleries like the Traverse City Whiskey Company say high taxes are holding them back.

“Our products are very expensive to make and it takes a very long time before we can actually sell them,” said Rapp. “If we have more cash available that means more equipment, employees and inventory.”

That’s why the Grand Traverse Distillery is hoping the Distillery Excise Tax Reform passes.

It would cut federal taxes for them from $13.50 per proof gallon — down to $2.70 per proof gallon per year.

It would be limited to the first 100,000 gallons they produce.

Here, they would save about $120,000 a year.

“We only are left with about $14 on a $30 bottle of vodka after the state gets their taxes on the spirits and the federal government,” said Kent Rabish, President of Grand Traverse Distillery. 

That savings would not only help their business, but the local farmers who grow their ingredients.

“We’re about two million pounds of local grown grain,” said Rabish. “I knew going into this about how the taxes and I knew it was going to be a little bit tighter. I’m here and I’m going to make it work.”

Michigan has the third highest number of craft distilleries in the country.

If the proposed legislation passes, it could add up to $400,000 dollars to Michigan’s economy.