Cole St. Brewery is one of many small breweries that received a federal excise tax cut in the recently passed and signed Republican tax plan. Photo by Ray Still

Cole St. Brewery is one of many small breweries that received a federal excise tax cut in the recently passed and signed Republican tax plan. Photo by Ray Still

Republican tax bill gives breaks to local breweries

While Democrats and Republicans continue to argue over the benefits and detriments of the Republicans recently passed and signed tax overhaul, there’s at least one group of local businesses owners who are likely to raise a pint to the sweeping tax changes — small breweries.

While Democrats and Republicans continue to argue over the benefits and detriments of the Republicans recently passed and signed tax overhaul, there’s at least one group of local businesses owners who are likely to raise a pint to the sweeping tax changes — small breweries.

Inside the tax bill is the Craft Beverage Modernization and Tax Reform Act, which reduces the federal excise tax on alcoholic drinks based on how many barrels are brewed annually.

Large brewers, or those who have a barrelage of over six million a year, are unaffected by the change, and the excise tax remains at $18 a barrel.

But small breweries, like Cole Street Brewery and Rockridge Cidery in Enumclaw, Elk Head Brewery in Buckley and Geaux Brewing in Auburn, get their federal excise tax cut from $7 a barrel to $3.50 a barrel for the first 60,000 barrels of beverages they sell, so long as they brew under 2 million barrels a year.

According to Bob Pease, the president and CEO of the Brewers Association, this excise tax cut would save small breweries (domestic brewers that produce less than six million barrels annually) more than $80 million a year, and all brewers more than $142 million annually, which will allow, “America’s small brewers — who are manufacturers and entrepreneurs — to reinvest in their businesses, expand their operations, and hire more workers,” he wrote in a recent Brewers Association article.

The Brewers Association attempted to get the Craft Beverage Modernization and Tax Reform Act through Congress back in 2015, but the act failed to get a vote in the last session.

However, the tax break may not be enough to help local breweries in Washington due to changing minimum wage laws.

According to Eric Brandjes, co-owner of Cole St. Brewery, the brewery produces about 250 barrels a year, and expects around $875 in annual savings due to the tax break.

“This will get entirely wiped out by the 50 cent increase in the minimum wage,” Brandjes said, referring to the 2016 voter-approved Initiative 1433, which boosted the state’s minimum wage up to $11 in 2017, and further raising it to $11.50 on Jan. 1, 2018.

The initiative will keep raising minimum wage to $13.50 by 2020.

“The biggest challenge over the next two years will be the increase of minimum wage to $13.50,” Brandjes said. “Payroll is our biggest expense, as it is with most small businesses, and as payroll goes up so do all of the payroll taxes (both federal and state) so our tax burden goes up as well.”

Additionally, the initiative requires all employers to offer paid sick leave to workers in 2018, putting another potential financial strain on businesses like Brandjes’.

The brewer also noted only the federal excise tax changed, and Washington’s beer tax remains at $4.78 per barrel.

“In general most small breweries (100 to 5000 barrels per year) are barely making ends meet in the current market, so any savings will go to debt service or, if they are lucky, owners or shareholders may see an actual return on investment,” Brandjes said. “I think the tax breaks will help the larger breweries more than the small guys. Every dollar helps, but it’s not really a game changer for the little guys.”

More in News

King County Fair begins four-day run; Saturday brings handcars, parade to Wilkeson

The longest-running county fair west of the Mississippi River is back with some old favorites and new attractions.

State survey seeks information from SR 410 drivers

Make sure to let WSDOT know how you think traffic between Bonney Lake and Enumclaw can be improved by Sunday, July 22.

EHS harriers pitching in with community service

The Hornet Team recently helped with the Miner’s Day 5K run in Black Diamond, and will be moving on to other projects later this summer.

Group moving ahead with plans for Mount Peak tower

The Mount Peak Historical Fire Lookout Association may have to shift where the tower would be placed, and the cost is estimated at $450,000.

First family officially moves into Ten Trails

It was hard for the McFaddens to find a home, with houses flying off the market within days, even hours. So they told their agent to stop looking at what’s already been built, and start searching for what is going to be built, leading a family of six to the Black Diamond development.

Townsend drafted by Toronto, now pitching professionally

The former Bonney Lake Panther was drafted after one season at Oral Roberts University, where he managed an impressive average of 11.64 strikeouts per nine innings.

Pamphlets, primary ballots headed for voters’ hands

The first round of election materials are scheduled to hit the mail July 12 in Pierce County and July 17 in King County.

Most Read