Which States Have the Highest Beer Taxes?

Whether you believe in leprechauns or not, you may be hoisting a beer with other revelers in bars and taverns on St. Patrick’s Day. According to the online consumer site WalletHub, more than 33 million Americans -- about seven times the entire population of Ireland – consumed approximately $4.4 billion worth of green beer and assorted other brews on March 17th last year. The numbers are expected to be roughly the same in 2017.

How much tax revenue do the states rake in from alcoholic beverages like beer? It varies widely across the country. For easy reference, the Tax Foundation has created a map listing the rates. It has yet to provide an update for 2017, but the figures have generally remained stagnant in recent years.

Click for larger image.

States with Lowest Beer Taxes

  • Wyoming $0.02 per gallon
  • Missouri $0.06
  • Wisconsin $0.06
  • Colorado $0.08
  • Pennsylvania $0.08
  • Oregon $0.08

States with Highest Beer Taxes

  • Tennessee $1.29
  • Alaska $1.07
  • Alabama $1.05
  • Georgia $1.01
  • Hawaii $0.93

Source: https://taxfoundation.org/how-high-are-beer-taxes-your-state-0/.

The graphic provided by the Tax Foundation for 2016 shows a swath of low tax rates stretching across the midsection of the country, with a few Western states collecting lower amounts of tax. Wyoming, Missouri, Wisconsin, Pennsylvania and Massachusetts are also notable for their relatively low rates. On the other hand, several southern states charge the highest tax rates, with Tennessee leading the way at $1.17 per gallon.

The Tax Foundation also points out that state and local governments use a variety of formulas to tax beer. The rates may include fixed per-volume taxes; wholesale taxes that are often a percentage of a product’s wholesale price; distributor taxes (sometimes structured as license fees as a percentage of revenues); case or bottle fees (which can vary based on size of container); and additional sales taxes. (Note that this measure does not include general sales tax, only those in excess of the general rate.)

According to a quote from the Beer Institute, an industry lobbying organization, on the Tax Foundation website, “taxes are the single most expensive ingredient in beer, costing more than labor and raw materials combined.” The Institute claims that if all the taxes levied on the production, distribution, and retailing of beer are added up, they amount to more than 40 percent of the retail price.

Of course, the state tax rate on alcohol isn’t the only factor in the cost of imbibing on St. Patrick’s Day. State policies may affect distributions while marketing promotions and competitive pricing can also affect the outlay. Finally, Uncle Sam charges an excise tax on top of the state tax rate.

Just remember: When you down a pint of Guinness Stout on St. Patrick’s Day, the state will be getting its fair share. Top of the morning to you!