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Alcohol Beverage Tax

State Alcohol Beverage Tax

An alcohol beverage is a drink that contains ethanol, a type of alcohol produced by fermentation of grains, fruits, or other sources of sugar that acts as a drug. Regulations require the labeling of the percentage alcohol content (as ABV or proof) and the use of a warning label.

Three-tier system of alcohol distribution

The three-tier system of alcohol distribution is a state-based regulatory alcohol control system comprised of suppliers (breweries, distilleries, wineries), distributors and retailers whose mission is to protect consumers from unsafe alcohol products and practices. The system was a response to post-Prohibition concern over consumption and consumer safety. It created a distinct separation between suppliers and retailers (wholesalers/distributors) that took away some of the power suppliers had over retailers.

Beer

Beer is a beverage fermented from grain mash. It is typically made from barley or a blend of several grains and flavored with hops. Most beer is naturally carbonated as part of the fermentation process. If the fermented mash is distilled, then the drink becomes a spirit. Beer excise taxes are applied generally per gallon, and unlike sales taxes are collected from the merchant who sells the alcohol rather than the end consumer. However, in almost all cases, beer excise taxes are passed on directly to the consumer in the form of raised alcohol prices. For latest state beer excise tax rates click beer.pdf.

Wine

Wine is a fermented beverage produced from grapes and sometimes other fruits. Wine involves a longer fermentation process than beer and a long aging process (months or years), resulting in an alcohol content of 9%–16% ABV. Wine excise taxes are applied generally per gallon, and unlike sales taxes are collected from the merchant who sells the alcohol rather than the end consumer. However, in almost all cases, wine excise taxes are passed on directly to the consumer in the form of raised alcohol prices. For latest state wine excise tax rates click wine.pdf.

Liquor

Liquors (or spirits) are alcoholic drinks produced by distilling (i.e., concentrating by distillation) ethanol produced by means of fermenting grain, fruit, or vegetables. Unsweetened, distilled, alcoholic drinks that have an alcohol content of at least 20% ABV are called spirits. Liquor or Distilled Spirits excise taxes are applied generally per gallon, and unlike sales taxes are collected from the merchant who sells the alcohol rather than the end consumer. However, in almost all cases, liquor excise taxes are passed on directly to the consumer in the form of raised alcohol prices. For latest state liquor excise tax rates click liquor.pdf.

Alcohol Concentration

The concentration of alcohol in a beverage is usually stated as the percentage of alcohol by volume  (ABV, the number of milliliters (ml) of pure ethanol in 100 ml of beverage) or as proof which is twice the percentage of alcohol by volume at 60 degrees Fahrenheit (e.g. 80 proof = 40% ABV).

Refer to TTB Beverage Alcohol to learn more.

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