|Bourbon distillers face big tax bills and higher tariffs|
For the first time there are more than 10m barrels of bourbon aging across Kentucky, and distillers set records by filling nearly 2.5m barrels in a single year. However, producers are contending with trade fights that hurt sales and a pandemic that is hampering tourism, along with an upcoming one-of-a-kind tax bill. Distillers in Kentucky are slated to pay more than $33m in aging barrel taxes in 2021, 140% higher than 10 years ago. Because bourbon-aging barrels are considered property, they are subject to property tax in Kentucky. “This is truly a historic and landmark record but that milestone comes with a cost,” Eric Gregory, president of the Kentucky Distillers’ Association, said about the record production and tax rates. “Every year that barrel ages, it is taxed again and again and again and again,” he explained. “If you’re drinking a bottle of 18-year-old Elijah Craig, that whiskey from that barrel had been taxed 18 times before it was bottled.” In addition to the aging-barrel taxes, Kentucky distillers are set to pay approximately $300m in state and local taxes, $1.8bn in federal excise taxes on alcohol, and new tariffs on exports.