CBMA Tax Rates for Beer, Wine, and Distilled Spirits

Under the Craft Beverage Modernization Act, federal excise tax rates for beer, wine, and distilled spirits are tiered by volume, with the deepest discounts reserved for smaller producers and for importers who receive tax-benefit assignments from foreign producers. Originally a temporary measure inside the Tax Cuts and Jobs Act of 2017, these rates were made permanent by the Taxpayer Certainty and Disaster Tax Relief Act of 2020. The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers them.

The reduced rates are not automatic for imports. A foreign producer has to register with TTB and assign specific quantities to a U.S. importer before that importer can pay anything below the standard rate. Volume caps also apply per controlled group, not per company, so shared ownership collapses multiple entities into a single set of thresholds.

Distilled Spirits

Federal excise tax on distilled spirits is set by 26 U.S.C. § 5001. The default statutory rate is $13.50 per proof gallon. CBMA layers two reduced tiers underneath it:

First 100,000 proof gallons: $2.70 per proof gallon
Next 22,130,000 proof gallons: $13.34 per proof gallon
Everything above 22,230,000 proof gallons: $13.50 per proof gallon

Rates apply the same to domestic production and imports, but an importer can only claim the reduced tiers if a foreign producer has assigned benefits through TTB.¹

How a Proof Gallon Is Calculated

Tax is owed on proof gallons, not physical volume. A proof gallon equals one U.S. gallon of liquid at 100 proof (50% alcohol by volume). To convert, multiply U.S. gallons by the alcohol percentage, multiply by two, then divide by 100. So 100 gallons at 40% ABV comes out to 80 proof gallons.² Higher-proof spirits produce a larger tax bill at the same physical volume: 1,000 gallons of 80-proof vodka is 800 proof gallons, while 1,000 gallons of cask-strength bourbon at 130 proof is 1,300 proof gallons.

Beer

Beer rates under 26 U.S.C. § 5051 also run in three tiers, and the smallest tier is domestic-only:

First 60,000 barrels: $3.50 per barrel, available only to brewers producing no more than 2 million barrels in the calendar year
First 6,000,000 barrels: $16.00 per barrel for all other domestic production and for imports
Above 6,000,000 barrels: $18.00 per barrel

Importers cannot claim the $3.50 rate no matter how small the foreign brewery is. Electing importers with proper assignments start at $16.00.³

A federal tax barrel is 31 gallons. The 2-million-barrel cap is measured across every facility a brewer operates. If two breweries under common control together produce 2.1 million barrels, the $3.50 rate is lost for the year.

Wine

Wine works differently under 26 U.S.C. § 5041. The statute sets base rates by wine category, then applies a credit that lowers the effective per-gallon cost for the first 750,000 wine gallons.

Base Rates by Category

Still wine, 16% ABV or under: $1.07 per wine gallon
Still wine, over 16% to 21% ABV: $1.57 per wine gallon
Still wine, over 21% to 24% ABV: $3.15 per wine gallon
Sparkling wine: $3.40 per wine gallon
Artificially carbonated wine: $3.30 per wine gallon

The split between still and sparkling sits at 0.392 grams of carbon dioxide per 100 milliliters. Above that, a wine is classified as sparkling (if naturally carbonated) or artificially carbonated, and the base rate roughly triples.⁴

CBMA Credits

The credits apply against the base rate for the first 750,000 wine gallons in a calendar year:

First 30,000 wine gallons: $1.00 credit per wine gallon
Next 100,000 wine gallons: $0.90 credit per wine gallon
Next 620,000 wine gallons: $0.535 credit per wine gallon

Credits apply across all wine types, not only still wine under 16%. A small winery producing 20,000 gallons of standard still wine keeps an effective tax of $0.07 per gallon after the $1.00 credit. A sparkling wine producer at the same volume pays an effective $2.40 per gallon ($3.40 base minus $1.00). Above 750,000 total wine gallons, the base rate applies with no offset.⁵

Hard Cider

Hard cider gets its own base rate of 22.6 cents per wine gallon, well below any wine category. To qualify, a product must be still (no more than 0.64 grams of CO2 per 100 milliliters), derived primarily from apples or pears, contain no other fruit products or fruit flavoring, and fall between 0.5% and less than 8.5% ABV.⁴

CBMA credits for hard cider scale down accordingly:

First 30,000 wine gallons: 6.2 cents per wine gallon
Next 100,000 wine gallons: 5.6 cents per wine gallon
Next 620,000 wine gallons: 3.3 cents per wine gallon

At the lowest tier, effective tax drops to about 16.4 cents per gallon. Miss any qualification, though, and the product is taxed as wine at the applicable rate, which can be roughly fifteen times higher. Effervescent ciders, ciders with blueberry flavoring, or ciders at 8.5% ABV or above lose the hard cider classification.⁶

Controlled Group Rules

The reduced rates and credits are capped per controlled group. Companies under common ownership share one set of volume thresholds. A parent that owns three distilleries does not get three separate 100,000-proof-gallon windows at $2.70; the group gets one.

The definition comes from 26 U.S.C. § 1563(a) and covers three structures:

Parent-subsidiary groups, where one corporation owns at least 80% of the voting power or total stock value of another
Brother-sister groups, where five or fewer individuals, estates, or trusts collectively own more than 50% of the voting power or stock value of two or more corporations, counting only identical ownership across those entities
Combined groups of three or more corporations where at least one qualifies under both of the above

When one brewery in a controlled group exhausts the $3.50 tier, every other brewery in the group moves to the $16.00 rate immediately.⁷

Controlled group limits apply on the import side too. The total quantity of beer, wine, or spirits receiving reduced rates from a single controlled group of foreign producers cannot exceed the statutory caps regardless of how many importers receive assignments. The related single taxpayer provision covers domestic producers only and does not apply to foreign transactions.⁸

How Importers Qualify: Foreign Producer Assignments

An importer cannot claim any CBMA reduced rate on a foreign product unless the overseas producer has registered with TTB and assigned specific benefits to that importer through the myTTB portal. The process runs in two stages.

Registration

The foreign producer registers with TTB and receives a Foreign Producer ID. Registration requires business details, the producer’s U.S. Food and Drug Administration Food Facility Registration number, and ownership information if the producer shares common ownership with other alcohol producers. A third-party agent can register on the producer’s behalf, but each foreign producer gets only one registration. Producers must update their information within 60 days of any change, and TTB requires an annual ownership confirmation before the producer can make new assignments.⁹

Assignment

Once registered, the foreign producer assigns tax benefits to specific importers through myTTB. Each assignment identifies the calendar year, the importer’s TTB permit number, the commodity type, the specific reduced rate or credit, and the exact quantity in proof gallons, wine gallons, or barrels. Assignments for a given calendar year can begin as early as October 1 of the prior year and must be completed by March 31 of the following year. Miss that March 31 deadline and the importer loses access to reduced rates for that calendar year’s imports.⁹

Filing on Time Matters

Whatever rate applies, the tax has to be reported on TTB Form 5000.24 by the applicable deadline. Failure to file runs 5% of the unpaid tax per month or partial month, capped at 25%. Failure to pay runs 0.5% per month, also capped at 25%. Interest compounds daily. Filing on time even when payment is short cuts the monthly penalty rate by 90%, because the failure-to-pay rate is one-tenth of the failure-to-file rate.¹⁰

1
Office of the Law Revision Counsel. 26 USC 5001 – Tax Imposed
2
Alcohol and Tobacco Tax and Trade Bureau. Distilled Spirits FAQs
3
Office of the Law Revision Counsel. 26 USC 5051 – Imposition and Rate of Tax
4
Office of the Law Revision Counsel. 26 USC 5041 – Imposition and Rate of Tax
5
TTB: Alcohol and Tobacco Tax and Trade Bureau. Tax Rates
6
Alcohol and Tobacco Tax and Trade Bureau. Cider FAQs
7
Office of the Law Revision Counsel. 26 USC 1563 – Definitions and Special Rules
8
U.S. Customs and Border Protection. Craft Beverage Modernization Act (CBMA) FAQs
9
Alcohol and Tobacco Tax and Trade Bureau. Craft Beverage Modernization Act (CBMA) Import Resources
10
Alcohol and Tobacco Tax and Trade Bureau. Tax Penalties and Interest