Summary:

 Senate Bill 378 (SB 378) amends the Liquor Excise Tax Act by increasing tax rates on various alcoholic beverages, including spirituous liquors, beer, wine, cider, and fortified wine. The bill also adjusts tax rates for microbreweries, small winegrowers, and craft distillers. SB 378 takes effect on July 1, 2025. 

Legislation Overview:

 Senate Bill 378 (SB 378) modifies the excise tax rates imposed on alcoholic beverages under the Liquor Excise Tax Act. The bill increases the tax rate on spirituous liquors from $1.60 per liter to $1.92 per liter and raises the tax on beer from $0.41 per gallon to $0.49 per gallon. The tax on wine increases from $0.45 per liter to $0.54 per liter, while fortified wine rises from $1.50 per liter to $1.80 per liter.

For microbreweries, the bill retains the tiered tax structure but increases rates slightly, maintaining the lower tax for small-scale production. Similarly, small winegrowers will see incremental tax increases, with a structure that provides lower rates for the first 80,000 liters produced and progressively higher rates for larger production volumes. Cider tax rates will increase from $0.41 per gallon to $0.49 per gallon, with reduced rates still applying to small winegrowers producing cider.

For craft distillers producing spirituous liquors, SB 378 adjusts tax rates based on alcohol content and volume. Products with up to 10% alcohol by volume will be taxed at $0.08 per liter for the first 250,000 liters sold, increasing to $0.28 per liter for the next 250,000 liters. For products exceeding 10% alcohol by volume, the tax increases to $0.32 per liter for the first 175,000 liters and $0.65 per liter for the next 200,000 liters.

The bill maintains the exemption for wine transferred between winegrowers for processing and storage, ensuring tax liability remains with the original producer unless the wine is resold. SB 378 takes effect on July 1, 2025.

Implications

SB 378 will generate additional revenue for the state by increasing excise tax rates on alcoholic beverages. The increases may result in higher prices for consumers, particularly for high-volume alcohol purchases. The structured tax approach for microbreweries, small winegrowers, and craft distillers maintains incentives for smaller producers while ensuring they contribute to state tax revenue.

The fiscal impact depends on consumption patterns and whether higher taxes lead to reduced sales. The tax increases align with public health strategies aimed at reducing alcohol consumption, particularly for higher-alcohol-content products. However, industry stakeholders may argue that higher excise taxes could hurt businesses, particularly small-scale producers. 

Current Law:

 Under current law, the Liquor Excise Tax imposes varying rates on different types of alcoholic beverages, with lower tax rates for small-scale producers such as microbreweries and small winegrowers. SB 378 increases these rates while maintaining the existing tiered tax structures for smaller producers.