10 States with the Lowest Beer Taxes
What’s better than beer?
What’s better than beer? Not paying a lot of tax on it. In addition to paying the federal tax of up to $0.58 per gallon*, consumers must face the local excise tax for beer — typically paid by brewers and distributors before the beer reaches store shelves, but nonetheless impacting the final cost of a cold brew.
State taxes on beer vary significantly in the U.S. — Tennessee's top rate of $1.29 per gallon is more than 64 times higher than in Wyoming, where the levy is only $0.02 (and dates back to the end of prohibition). Beer being portable, this leads to cross-border shopping by some consumers. States with lower beer taxes, such as Indiana and Delaware, see considerable purchases from high-tax neighbors such as Kentucky and Maryland, respectively. In some states, however, it may be illegal — a form of bootlegging — to return with beer purchased out-of-state.
If you want to get a brew that won’t strain your wallet, consider drinking in these ten states with the lowest beer taxes — and have a look at our picks of delicious breweries you’ll find there.
*Federal beer taxes are lower for smaller breweries.
Indiana: $0.12 per Gallon
Hoosiers get a good deal on more than beer. Their spirits are taxed at $2.68 per gallon and wine is taxed at only $0.47 per gallon — both modest compared to other states. Not a bad place to tailgate the afternoon away.
While Indiana isn’t playing in the same conference as brewing giants in Oregon and California, it’s certainly doing its part to uphold craft beer in the Midwest. One brewery that’s going the extra mile to bring something new to the table is 3 Floyds Brewing. With a motto of being “Not Normal,” the brewery, launched in 1996, emphasizes experimentation. A popular 3 Floyds beer, Zombie Dust (an intensely hopped pale ale) was ranked in the top five of all beers nationally by members of the American Homebrewers Association in 2018.
New Jersey: $0.12 per Gallon
New Jersey offers beer taxed at the same price as Indiana at $0.12 per gallon (it’s a three-way tie, so we’ve listed these states alphabetically ). Good news if you want to reprise “Jersey Shore”?
Craft beer is getting big in New Jersey — the Garden State is tied for the fastest growth with Kentucky, according to a report prepared by C + R Research. More liberal licensing laws have allowed microbreweries to sell beer by the glass and the keg. Among them: the plainly named Carton Brewing. The brainchild of two cousins in Atlantic Highlands, Carton Brewing’s offerings inlcude a low alcohol content session ale called “Boat Beer,” for a day on the water, and, also with a nautical nod, “Red Rye Returning.”
Rhode Island: $0.12 per Gallon
As one of only two states to have rejected the 18th Amendment regarding Prohibition, Rhode Islanders will stand by their hankering for a cold one. Lucky for them, Rhode Island doesn’t tack on much on top of beer — only $0.12/gallon for tax. This tax includes fees for casing and/or bottling.
The state doesn’t have nearly as many breweries as others on this list, but remember, it’s the country’s smallest. That said, Proclamation Ale Company in Warwick is doing big things, with more than 70 offerings (though they’re not all available all the time). The six-year-old brewery is best known for their Derivative series, a rotating set of single-hopped Pale Ales.
Massachusetts: $0.11 per Gallon
Historians tell us the ships that carried the puritans arriving at Massachusetts Bay held more beer than water. With those sorts of priorities, it shouldn’t be surprising to see modern-day beer tax kept low in the Bay State.
Beyond Boston Beer Company’s famous Founding Father-inspired lager, there are a handful of great craft options and microbreweries, many of which are making variants of the New England-bred “juicy” or “hazy” IPA, which downplays the bitterness typically found in IPAs, while upping the hop flavor and aroma. Tree House Brewing Company in Charlton specializes in this genre (well, and stouts). Offerings include the classic Julius, Haze (peach, orange and passionfruit notes), Sap (soft notes of grapefruit and mango) and Green (lemon-lime and pineapple flavors). Tree House only sells its beer on site.
Colorado: $0.08 per Gallon
Beer is such a staple in the Centennial State that the Brewers Association, a trade group for independent and craft brewers, is based in Boulder. And the state has no shortage of good options when it comes to breweries. In fact, five Colorado cities — Boulder, Fort Collins, Loveland, Denver and Longmont — are among the top 20 in the nation in breweries per capita, according to a June study by C + R Research. Denver’s Breckenridge Brewery takes its name from the ski town where it started (and still has a brewpub), but today has its main production facilities in Littleton, where you can drink their Vanilla Porter, Avalanche Amber Ale or Agave Wheat (among others) over a game of bocce ball and a view of the majestic Rocky Mountains.
Oregon: $0.08 per Gallon
Oregon’s beer game is one of the top in the country, so the low tax is just an added perk. The state adds less than a dime in excise taxes on beer, but it’s not as generous when it comes to spirits, which are taxed at $21.98/gallon (the second highest rate in the U.S.) That might have something to do with why the state has nearly 300 breweries in operation. And Oregon drinkers are a loyal bunch: roughly two-thirds of all beer consumed in the state is made in Oregon.
It’s hard to single out one gem among the many breweries that helped create the modern craft beer movement, but starting in Portland is one way to thin the herd. Upright, Breakside Brewery, and Wayfinder are all great picks. Breakside, an eclectic brewer known for its flagship IPA and hoppy ales, was crowned king of the state’s beer scene after winning Brewery of the Year at the 2019 Oregon Beer Awards.
Pennsylvania: $0.08 per Gallon
In the words of Ben Franklin, “nothing can be said to be certain, except death and taxes.” And the founding father had a point: Every gallon of beer in Pennsylvania faces an 8-cent excise tax. But considering it’s one of the cheapest taxes in the country, Ben may not have minded having to fork over the extra amount for his favorite ale — especially considering the far pricier tax on spirits at $7.24/gallon.
Pennsylvania has a rich history, but that history extends to its beer scene as well. In fact, the colony of Pennsylvania established breweries as early as 1683, making the tradition of drinking beer in America older than the establishment of America itself. Today, the state produces the most craft beer in the U.S., with more than 350 craft breweries. For a blast from the past, check out America’s oldest brewery, Yuengling, in Pottsville, launched nearly 200 years ago by a German immigrant. For a newer player, give Brew Gentlemen in Braddock, Pa. a try. Launched by a couple of recent college graduates in 2014 (after they honed their home brewing skills at school), the brewery focuses on hop-forward flavor profiles.
Missouri: $0.06 per Gallon
The “Show-Me” state is all about putting your money where your mouth is – even if that’s barely more than a nickel. And it’s not just beer that gets a sweet deal. Missouri also has some of the cheapest wine, taxed at $0.42/gallon and one of the cheapest spirit taxes at $2/gallon.
Most people know St. Louis is home to beer giant Anheuser-Busch, but if you’d like something a bit less mass-market than Busch, Bud or Bud Light, try Schlafly Beer, the largest locally-owned independent craft brewery in Missouri, started in 1991. After you’ve tasted their kolsch or white lager, the brewery guarantees all you’ll want is to “Drink MO.”
Wisconsin: $0.06 per Gallon
Sure, wine and cheese are a great duo. But the best partner for cheese curds is an ice cold beer – especially when the state adds just six cents onto the price of every gallon of beer.
Milwaukee is the birthplace of Miller and Pabst, but it’s no stranger to the microbrewery trend, too. Lakefront Brewery opened in 1987, and it wasn’t long before it was doing some trend setting of its own. It was the first U.S. brewery to bottle fruit beer since prohibition was repealed; the first to bottle certified organic beer; and most notably, the first brewery to receive federal approval to brew gluten-free beer. Today, Lakefront is a huge operation – it produced nearly 50,000 barrels in 2017.
Wyoming: $0.02 per Gallon
Granted, the home to Old Faithful has more geysers than breweries, but that doesn’t mean Wyomingites don’t know their way around a keg.
If you find yourself in Wyoming, consider Melvin Brewing, a favorite for IPA lovers. What started as a 20-gallon system in the back of a Jackson Hole Thai restaurant grew into a 3-barrel system serving beers all over the West Coast. Their award winners are the original Melvin IPA, the 2x4 Double IPA and the Ch-Ch-Ch—Cherry Bomb. The hop-heavy brewery won Brewing Group of the Year at the 2017 Great American Beer Festival, so they’ve got the hardware to backup their reputation.