Beer Taxes: How Much are They in Your State?

State and local governments need taxpayer funds to pay for various services and one of the popular targets is beer. The excise tax paid on each gallon of beer sold ultimately adds to the retail price, increasing what you and I pay at the store, restaurant, or tavern for our favorite brew.

Governments calculate beer excise taxes in different ways. Some slap a flat, per gallon tax on beer. Others calculate the tax as a percentage of the beer’s wholesale price while other states and localities tax based on the number of bottles/cans and size of each bottle or can contained in a 24 pack case. The methodology differs, and so do the taxes themselves, which range widely from state to state, as this map from the Tax Foundation illustrates:

As the map indicates, Tennessee pays the highest beer tax of any state, a whopping $1.29 per gallon. With the excise tax at this level, a 12- pack of Tennessee beer is increased in price by $1.45, just to cover the tax. At the bottom is Wyoming, which adds just $0.02 per gallon- an amount so small it makes you wonder why the state even bothers collecting any beer tax at all.

With a few exceptions, beer excise taxes are really not very much and add only a small amount to the price of each 6 pack, 12 pack, case, etc. Excise taxes as a percentage of total tax revenues collected have been trending downward for many years, convincing some lawmakers that beer and other excise taxes are due for an increase. However, for the craft beer market, this is certainly something they don’t want to see because it makes it that much more difficult to compete against the big breweries. Yes, the big boys have to pay the tax also, but they have far greater financial means than your local hometown brewery.

Taxes are not created equally and the way each U.S. state taxes beer and other consumer goods varies widely. This map is a good resource that shows just how much of each beer purchase goes toward state and local government authorities. It’s something else to think about on your next trip to the beverage store.