Federal tax break for local breweries set to expire in 2020

TUCSON, Ariz. (KOLD News 13) - A new year is on tap as we head into the roaring 2020s. Some people may choose to celebrate with a craft brew made right here at home.

“It creates an attachment,” Benjamin Vernon, owner of Crooked Tooth Brewery in downtown Tucson, said. “Like hey, I know the guy who makes this beer.”

Vernon, along with his wife, Julie, know a little something about the Old Pueblo.

“This is our area. We went to Mansfield. We went to Tucson High. We went to the U of A,” he said.

But for the Vernons, the new year could bring about barrels of change.

Specifically the price of them.

“We’re getting ready to see minimum wage increase,” Vernon said. “Now we’re getting a tax increase on our barrels.”

The Vernons have been in the brewery business for about three years. Most of that time has fallen under the Craft Beverage Modernization Tax Reform Act passed in 2017. Because of this, they pay $3.50 a barrel in taxes, but at the start of 2020 that could double.

“We had about two months of business where we had $7 a barrel,” Vernon said. “That two months of business we didn’t do a lot of brewing, you know.”

This tax break was like a glass half full for small business.

Like the glass, there was plenty of room to grow. But if it expires, there's fear that optimism goes down the drain.

“Something that we may be investing in employment or we also give a lot to the community,” Vernon said.

These are things Vernon said he's been able to do because of this tax break, like working with local nonprofits on events.

But he's worried that may soon disappear and hopes he won't have to pose a sticker shock to his customers.

"Anytime we see increases, sometimes that means we have to increase cost," he said.

The hope for local breweries like this one is this federal tax break gets another pour.

So businesses and their customers won't have to figure out how to swallow the cost.

The Craft Beverage Modernization Tax Reform Act would also impact distilleries and wineries.

Local businesses have been reaching out to their legislators in Washington with hopes of an extension.

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