If you’re planning to start a wine business — winery, wine shop, wine retail, restaurant, wine bar etc, it’s important to factor in your state wine excise tax rates. Federal and state wine excise rates vary by alcohol content and type of wine. The states with the lowest tax rate are California and Texas as per the Tax Foundation, the nation’s leading independent tax policy research organization.
States Taxes for Wine Businesses
According to the foundation, wine taxes apply to off-premise sales (from retail sources) not (on-premise sales) at a restaurant or bar. That means certain wine types you may be considering to sell, and wines with a higher alcohol content may be subject to higher excise tax rates at your retail source in some states compared to others. You need to know where your state lies on the wine tax spectrum.
Here’s a list of states’ wine excise rates as per the Tax Foundation:
1. States with the Lowest Excise Tax Rates on Wine
The five states with the lowest wine excise rates are California ($0.20), Texas ($0.20), Wisconsin ($0.25), Kansas ($0.30), and New York ($0.30).
2. States with the Highest Excise Tax Rates on Wine
Kentucky has the highest wine excise tax rate at $3.17 per gallon, followed by Alaska ($2.50), Florida ($2.25), Iowa ($1.75), and New Mexico and Alabama (tied at $1.70).
3. Federal Excise Tax Rates on Wine
Federal rates for wines with up to 14 percent alcohol by volume (ABV) are taxed at $1.07 per gallon, wines between 14 and 21 percent ABV at $1.57 percent per gallon, and wines between 21 and 24 percent ABV at $3.15 per gallon. Sparkling wine is taxed at $3.40 per gallon regardless of alcohol content.
Note: This list does not include states that control all wine sales: New Hampshire, Mississippi, Pennsylvania, Utah, and Wyoming.
Other Factors that Determine Wine Excise Rates
The Tax Foundation notes that wine excise rates can also include case or bottle fees dependent on the size of the container, as in states like Arkansas, Minnesota, and Tennessee. Moreover, rates may include sales taxes specific to alcoholic beverages and wholesale tax rates, as is the case in Arkansas, Maryland, Minnesota, South Dakota, and the District of Columbia.
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