State Wine Taxes Hit Small Businesses

By at 9 August, 2018, 9:14 am

Small Business Insider


by Raymond J. Keating-

Normally, you can count on the states of California and New York to inflict the most burdensome taxes on pretty much anything. Well, that’s not the case when it comes to at least one product – wine. Along with Kansas, Wisconsin and Texas, California and New York serve up the lightest state taxes on wine. In fact, California and Texas tie for the lowest wine tax.

From a consumer standpoint, a nice glass of wine can be refreshing during the summer, and the just-right accompaniment with certain meals.

On the production side, it turns out that the wine business very much is about small business. Consider that, according to the latest Census Bureau data, 70.4 percent of wineries in the U.S. have fewer than 10 employees, 84.5 percent have fewer than 20 workers, and 98 percent fewer than 100 employees.

The map above from the Tax Foundation provides a full bodied look at wine taxes across the states.

At the other end of the wine tax burden from California and Texas, the Tax Foundation reported: “Kentucky has the highest wine excise tax rate at $3.47 per gallon, followed by Alaska ($2.50), Florida ($2.25), Iowa ($1.75), and Alabama and New Mexico (tied at $1.70).”

For states that are working to boost their wine industry – like Virginia –lowering the tax burden will help to ripen the overall climate for the vitners who face many risks in bringing their product to market.  The wine industry in Virginia, similar to the national data, is dominated by small firms. More than 95 percent of wineries are small, producing less than 10,000 cases per year. Although not the most burdensome at $1.51 per gallon, it is much higher than most of the states, including the top competitive states (like California and New York).

In the end, high state taxes on wine wind up hurting the small businesses that dominate the winery industry.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

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