Buzz Kill: Beer Taxes Hit Hard, Report Says

20¢ per gallon beer excise tax rate in California

A cold beer may cost more than you think. According to the Beer Institute’s Beer Tax Facts report, taxes account for over 40% of beer’s retail price, totaling $31.9 billion annually, including $5.3 billion in excise taxes—more than labor and materials combined.

These taxes disproportionately burden low- and middle-income households, who pay half of all beer taxes while earning less than a quarter of U.S. income. The report calls this regressive, noting that the poorest pay 6.5 times more as a share of income than the wealthy.

Higher beer taxes also threaten jobs. The 1991 federal tax doubling from $9 to $18 per barrel cost an estimated 60,000 jobs. State hikes can drive sales to neighboring states, hurting local economies.

Claims that beer taxes curb alcohol abuse, drunk driving, or teen drinking don’t hold up, the report argues. Studies show heavy drinkers and repeat offenders are unfazed by price hikes, and teen drinking rose in California after 1991 tax increases.

The solution? Roll back the federal beer tax to pre-1991 levels, potentially creating 50,000 jobs and easing the load on working Americans. Historically, beer taxes were cut after wars, and 1991 luxury taxes were repealed—yet the beer tax persists.

For details, visit www.beerinstitute.org.