As of June 26, 2019, Connecticut Governor Ned Lamont signed a $43.4 billion budget for the 2020 and 2021 fiscal years. Included in this budget are specific items that will directly impact the brewing industry.
1. Alcoholic Beverages Tax
Effective July 1, 2019, the alcoholic beverages tax imposed on alcoholic beverage distributors has been amended as follows:
- The tax rate on beer sold on the premises covered by a manufacturer’s permit for off-premises consumption is now set at 50% of the general rate of the tax on beer. This was formerly exempt from the Alcoholic Beverages Tax, and nets out to be $3.60 per barrel or $.12 per gallon.
- The tax rate on alcoholic beverages outside of beer is generally increased by 10%.
Effective October 1, 2019, licensed distributors will be required to report and pay Inventory Tax on all alcoholic beverages (excluding beer) that they have in inventory in the state of Connecticut. The report is due at the opening of business October 1, 2019, and the deadline to pay the Inventory Tax will be on or before November 15, 2019.
Effective January 1, 2020, the exemption from the Alcoholic Beverages Tax for the first 15 barrels of beer produced annually and consumed on the premises covered by a manufacturer’s permit will be revoked.
2. Increase in Sales and Use Tax Rate
Effective October 1, 2019, the sales and use tax rate will increase from 6.35% to 7.35% on the following:
- Spirituous, malt or vinous liquors, soft drinks, sodas or similar beverages
- Meals sold by an eating establishment, caterer or grocery store
3. Additional tax law changes that may impact the brewing industry include:
- Changes to Pass-Through Entity Tax which will decrease your credit
- Business Entity Tax repeal
- Paid Family and Medical Leave (FMLA)
- Increases in minimum wage law
- Single-use plastic bag fee
MahoneySabol understands the distinctive challenges of breweries and distilleries. We recognize the importance of accurate product costing and inventory valuation, from application of direct and indirect costs to allocation of overhead expenses, inventory tracking and distribution issues. Whether you are expanding your production facilities or entering new markets, MahoneySabol’s professionals offer a breadth of integrated services tailored to your individual needs.
If you have questions, please contact our Brewery Tax Experts: