2026 Notable Changes
The tax on beer in Arkansas decreased by 1 cent per gallon to $0.372 per gallon.
The tax on beer in Utah increased by 0.8 cents per gallon to $0.439 per gallon and is scheduled to increase similarly every July 1 until 2027.
The per gallon rate shown reflects the tax applicable to an off-premises sale of 4.7 percent alcohol by volume (ABV) beer in a 12-ounce container. In 16 states, the tax rate varies based on alcohol content, place of production, size of container, or place of purchase.
For instance, Virginia has a different tax per bottle for containers up to 7 ounces, up to 12 ounces, and greater than 12 ounces. Idaho levies triple the tax if the beer is more than 5 percent ABV, which is statutorily treated the same as wine and taxed at $0.45 per gallon rather than $0.15 per gallon. Missouri recently cut taxes on beer manufactured in American breweries to only $0.02 per gallon.
Some states allow localities to levy additional taxes that are not reflected in the statewide figures. The Municipality of Anchorage has a local sales tax on alcohol, for instance, which amounts to an additional 5 percent on sales of beer and other alcohol. Alabama and Georgia have a statewide uniform local tax on beer that adds about another 50 cents per gallon to beer sales in those jurisdictions.
Many states also generate revenue via licensing fees and permits from beer distributors and retailers. Other states manipulate the price of beer—and thus the minimum amount of ad valorem tax collected—by establishing statewide minimum price levels.
Federal and state taxes on beer are often levied on the manufacturer, wholesaler, or retailer, which are not explicitly broken out into a separate line item on a bill or receipt like a sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. . Instead, the tax burden is baked into the final retail price. Thus, consumers may not be cognizant of just how much they are paying in taxes on their drink of choice.
The beer industry has been challenged recently by tariffTariffs are taxes imposed by one country on goods imported from another country. Tariffs are trade barriers that raise prices, reduce available quantities of goods and services for US businesses and consumers, and create an economic burden on foreign exporters.-related cost increases and broader consumer trends of general reductions in drinking. As many people, especially younger consumers, opt for low- or no-alcohol options, policymakers should remain mindful of the unsuitability of excise taxes for raising general revenues. With steady ad quantum taxes losing real value to currency debasement and ad valorem taxes subject to significant fluctuations from behavioral changes, state governments that depend on beer taxes for general spending may find themselves with unforeseen budget gaps.
Beer exists within a complex taxation and regulatory landscape. Alcohol is generally taxed using a categorical system that treats beer, wine, and spirits differently, even after adjusting for alcohol content. The rigid statutory categories also often face challenges adapting to innovation in the industry and treating new products properly.
Modernizing the arcane categorical system by instead taxing according to actual alcohol content would make the broader alcohol tax system simpler and more neutral. Understanding the tax framework is crucial for both consumers and policymakers as the industry and the policy evolve for one of America’s most cherished beverages.
