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Tax Breaks

10 States With the Lowest Beer Taxes

If you want to get a brew that won't strain your wallet, consider pouring up in these 10 states.

by: Sabrina Medler, the editors of Kiplinger's Personal Finance
November 21, 2020

Getty Images

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 has led to cross-border shopping by some consumers. 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 10 states with the lowest beer taxes.

*Federal beer taxes are lower for smaller breweries.

1 of 10

Massachusetts

Courtesy of Tree House Brewing Company

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 taxes kept low in the Bay State — the state tax on beer is only 11¢ per gallon. Plus, beer, wine and spirit connoisseurs living in or visiting Massachusetts will be happy to know that there’s no sales tax on alcohol purchases in the state, either.

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.

2 of 10

Maryland

Courtesy of Flying Dog

Despite landing on this list with a low 6¢ per gallon excise tax on beer, the “Old Line State” has a 9% alcohol-specific sales tax for beer (as opposed to the normal 6% state sales tax). That ultimately makes the cost of beer a little pricier.

The beer scene in Maryland traces its roots to one of Baltimore’s first manufacturing industries, the brewing of National Bohemian beer or “Natty Boh” (still around, as a Pabst brand). But the scene is much more diverse now, with dozens of other breweries. The largest is Flying Dog, with nearly 30 beer offerings, including the controversially named Raging Bitch, a Belgian-style IPA.

3 of 10

Washington, D.C.

Courtesy of DC Brau

While the beer tax in the District of Columbia is among the lowest in the country at only 9¢ per gallon, the city also charges a 10.25% tax on off-premise alcohol sales (10% for to-go sales or delivery with food). This includes a bottle of wine purchased at a grocery or liquor store, not a cold glass of lager at your favorite dive bar.

The nation’s capital experienced a bit of a brewing dry spell for the second half of the last century, but DC Brau filled the void in 2009 as the first packaging brewery the District had seen since 1956. And it wouldn’t be Washington if they didn’t have to get past some bureaucratic red tape first. DC Brau founders Brandon Skall and Jeff Hancock were instrumental in the legalization of on-site brewing sales and growler usage in D.C., paving the way for other breweries to follow.

4 of 10

Pennsylvania

Courtesy of Yuengling

Every gallon of beer in Pennsylvania faces an 8¢ per gallon excise tax. But considering it’s one of the cheapest taxes in the country, you might not mind having to fork over the extra amount for your favorite brew.

The Keystone State has a rich history that also extends to its beer scene. 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. It’s located in the city of Pottsville, which is about a two-hour drive northwest of Philadelphia, and was launched nearly 200 years ago by a German immigrant.

5 of 10

Oregon

Courtesy of Breakside Brewery

Oregon’s beer game is one of the top in the country, so the low tax is just an added perk. The state only adds 8¢ per gallon in excise taxes on beer, but it’s not as generous when it comes to spirits, which are taxed at nearly $22 per gallon. That might have something to do with why the state has about 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.

6 of 10

Kentucky

Courtesy of Against the Grain Brewery

Kentucky levies a modest 8¢ per gallon excise tax on beer production, but then adds a 10% wholesale tax on brewers. And while Kentucky’s distilleries outnumber its breweries by about 75 to 55, it still offers some great craft breweries. For example, Against the Grain Brewery (a fitting name, no?) opened its doors as Louisville’s first brewer-owned and operated brewery in 2011. The owners create unique beers in six main styles — session, hop, whim, malt, dark and smoke — and export to 43 U.S. states and more than 25 countries.

7 of 10

Colorado

Courtesy of Breckenridge Brewery

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. Maybe that’s why the state’s beer excise tax is so low at only 8¢ per gallon.

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 — were among the top 20 in the nation in breweries per capita, according to a 2019 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.

8 of 10

Wisconsin

Courtesy of Lakefront Brewery

With a low 6¢ per gallon excise tax, Wisconsin only collected $8.5 million in tax revenue from beer sales last year, according to a report released by the state’s Department of Revenue. By comparison, liquor and wine sales generated nearly seven times that amount at $53.6 million. 

Milwaukee, which is the largest city in the state, is the birthplace of Miller and Pabst — but it’s no stranger to the microbrewery trend. In fact, Milwaukee’s Lakefront Brewery, which opened in 1987, was the first U.S. brewery to bottle fruit beer since prohibition was repealed. It was also the first to bottle certified organic beer — and most notably, the first brewery to receive federal approval to brew gluten-free beer.

9 of 10

Missouri

Courtesy of Schlafly Beer

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 with the state’s modest 6¢ per gallon excise tax. Missouri also has a relatively low excise tax on wine at only 42¢ per gallon.

Most people know St. Louis is home to beer giant Anheuser-Busch, but if you like your suds a bit less mass-marketed, try Schlafly Beer, the largest locally-owned independent craft brewery in Missouri.

10 of 10

Wyoming

Courtesy of Melvin Brewing

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. And, at a mere 2¢ per gallon, Wyoming boasts the lowest excise tax for beer among the states featured on our list.

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 30-barrel system serving beers all over the West Coast.