Northern Michigan Breweries Hoping For Tax Cut Renewal

A tax cut that’s helped grow the craft brewing industry across the country is set to expire at the end of the year.

That has some northern Michigan brewers worried.

The tax cut was passed back in 2017 as part of the Tax Cut and Jobs Act.

It lowered the federal excise tax on brewers who make less than 2 million barrels of beer each year.

Stormcloud Brewing Company in Frankfort saw an immediate boost when The Craft Beverage Modernization and Tax Reform Act was passed back in 2017.

“When the initial tax credit passed, it was an immediate savings for us and we were at a time when our business was continuing to grow, and so we took that opportunity to look at how we could invest in additional equipment, which brought on new employees as well,” said Stormcloud Co-Owner Rick Schmitt.

But taxes for breweries like Stormcloud will go back up at the end of the year, if Congress doesn’t act.

“We seized the moment two years ago to invest in our company, and it would be not devastating but certainly something we would have to look at moving forward and if this doesn’t get continued on,” said Schmitt.

Here is what would happen if that tax cut expires: Right now brewers pay $3.50 per barrel on the first 60,000 barrels of beer they make. If this tax cut expires, that tax gets a whole lot frothier, and goes up to $7.00 a barrel.

“It’s a nationwide tax credit that was issued two years ago, and if it doesn’t get re-upped then everyone across the country will have their barrel tax doubled, so this is a big issue, not just in Michigan, but across the country,” said Schmitt.

There’s currently legislation in Washington that would extend the tax cut.

“We were able to add tank space, which allowed us to increase our distribution footprint, so today we’re in 35 counties in Michigan and likely we wouldn’t be there today if it weren’t for this tax credit,” said Schmitt.