Tennessee beer connoisseurs will soon be provided with a greater selection of beer at lower prices, according to the proponents of Tennessee’s beer tax reform (S.B. 422), which was signed into law by Governor Bill Haslam on April 23, 2013.
Under this legislation, a 31-gallon barrel will be taxed at a flat rate of $35.60, and barrels containing smaller amounts will be taxed at a proportionate rate. Currently, wholesale beer is taxed at 17 percent of its price in Tennessee, plus federal and state taxes per 31-gallon barrel. Any beer sold to consumers in Tennessee is also subject to sales tax, which is as much as 9.75 percent.
Proponents of this change to a volume-based tax stated that Tennessee has the highest beer tax in the country because the tax is based on price, not volume. In addition, such tax structure hurts local microbreweries whose beer is usually more expensive due to lower production volumes.
The new beer tax is effective July 1, 2013.