NC ranks among highest taxes by state on distilled spirits and beer

North Carolina ranks fifth for highest state tax on distilled spirits at $18.23 per gallon and sixth for beer at $0.62 per gallon, according to new reports out from the Tax Foundation. 

What is the most expensive ingredient in beer in the US? It is, in fact, taxes according to a June 8 report from the Tax Foundation, accounting for much more of the final price tag than labor and ingredients combined. Between state and federal taxes, it can account for as much as 40.8% of the retail price tag. 

The US federal excise tax varies from $0.113 per gallon for the first 60,000 gallons produced by qualifying small domestic brewers to $0.581 per gallon for imported beer, according to the report. Each state also has an excise tax on beer in addition to its state and local taxes. 

Tennessee has the highest beer tax at $1.287 per gallon, followed by Alaska at $1.07, Hawaii at $0.93, and Kentucky at $0.89, according to the report. Wyoming has the lowest beer tax at $0.019 per gallon, followed by Missouri at $0.06 per gallon and Wisconsin at $0.065 per gallon. 

“Often referred to as ‘sin taxes,’ high taxes on items like alcohol and cigarettes are designed to extract money from the purchase of products politicians deem to be bad for you,” Brian Balfour, VP of research, told the Carolina Journal. “In reality such taxes are typically quite regressive, hitting low-income people disproportionately hard. It’s disappointing to learn how heavily North Carolina taxes beer and liquor compared with other states. For instance, North Carolina’s tax on beer is more than four times as high as New York’s, and its liquor tax nearly three times that of New York.”

North Carolina ranks just one place higher, in fifth place, for the highest state tax on distilled spirits at $18.23 per gallon, according to a May 22 report from the Tax Foundation.

Washington leads at $36.68 per gallon, followed by Oregon at $23.74 and Virginia at $23.47, with Alabama in fourth place at $22.87, according to the report. Wyoming and New Hampshire have no tax on distilled spirits, and Missouri has the lowest tax at $2 per gallon. 

At 42.4% of the US market share, distilled spirits lead the market, slightly outpacing beer sales for the fourth year in a row, according to the report. Since 2000, market share growth of more than 13% has been largely driven by newer products like hard seltzers and ready-made cocktails. 

Distilled spirits generally carry the highest alcohol tax rate. Spirits not only carry a higher alcohol content than wine or beer, but they are also taxed at a higher rate per alcohol content than other types of alcohol, according to the report. 

These newer products have blurred the lines for alcohol taxation by type, according to the report.

“NC ranks among highest taxes by state on distilled spirits and beer” was originally published on www.carolinajournal.com.