These States Have the Highest and Lowest Alcohol Taxes

If there's one thing U.S. politicians love, it's a good old-fashioned sin tax. These days everything from soda to fireworks gets the sin tax treatment, but booze is the OG of unfairly taxed vices in America. And this shows no signs of abating, according to a new report from the Tax Foundation. The organization highlights how beer, wine, and spirits are taxed around the country, including which states have the highest and lowest alcohol taxes and whether these taxes increased or decreased last year. 

Not many have been decreasing. In 2013, only a handful of states lowered taxes on beer, wine, or spirits, and most by miniscule amounts. The good news, I suppose, is that there weren’t many booze tax hikes either. But that’s little comfort considering how high some of these taxes already are.

In Washington state, for instance, residents pay an extra $35.22 per gallon to state coffers when they buy any sort of spirits. And crossing the border to neighboring Oregon won’t help much—it boasts the second-highest spirit tax, at $22.73 per gallon. Rounding out the top five are Virginia ($19.19), Alabama ($18.23), and Alaska ($12.80).

The latter two states have the distinction of making it into the top five for highest taxes in all three alcohol categories. In Alaska, beer is taxed at $1.07 per gallon, second only to Tennessee, with a $1.17 per gallon beer tax. Alabama has the third highest beer-tax rate ($1.05 per gallon), followed by Georgia ($1.01), and Hawaii (93 cents).

And Kentucky takes top billing for wine taxes, adding an additional $3.56 per gallon to the price of wine. It's followed by Alaska ($2.50 per gallon), Florida ($2.25), Iowa ($1.75), and a tied Alabama and New Mexico ($1.70).

Only two states—Wyoming and New Hampshire—decline to tax spirits altogether. They also join Utah, Missouri, and Pennsylvania in keeping wine sin-tax free. But you’ll find beer taxes in all 50 states and Washington, D.C. According to The Beer Institute, “taxes are the single most expensive ingredient in beer.”

The Institute also notes that beer taxes are regressive.

“Instead of taxing equitably across all income groups, beer taxes place a much heavier burden on low- and middle-income taxpayers than on the rich. That’s because many more beer drinkers are men and women with modest incomes rather than wealthy people.

An analysis by the Beer Institute found that households earning less than $50,000 per year pay half of all beer taxes, while accounting for less than one-fourth of all income earned in the U.S. Beer taxes are actually 6.5 times higher as a percent of income for lower-income households (those earning less than $20,000 per year) compared to higher-income households (earning $70,000+ per year). The tax on beer is thus one of the most discriminatory of all taxes in the federal and states’ tax codes.”

Since the Tax Foundation’s 2013 report, only two states have lowered beer taxes (Washington state down from 52 cents to two cents; Minnesota down one cent). Twelve states decreased excise taxes on spirits, while one (Minnesota) slightly decreased its tax on wine. 

Meanwhile four states (Mississippi, Montana, Utah, and Vermont) raised taxes on spirits. North Carolina, Arkansas, Kentucky, and D.C. all raised beer taxes (North Carolina by nine cents, the rest by two cents). North Carolina also hiked its wine tax by 21 cents per gallon, while Kentucky added 40 cents to its already prodigious wine tax.

The Tax Foundation notes that there isn’t much consistency on how state and local governments tax alcohol. Some tax a fixed rate per volume; others mandate wholesale taxes that are a percentage of the product’s price. Tax rates also include distributor taxes (generally structured as license fees), retail taxes and bottle fees.

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  • BakedPenguin||

    NH declines to "tax" liquor because it has a state monopoly on it.

  • Surly Chef||

    Also the case in PA. The monopoly part anyway.

  • BakedPenguin||

    I hate to admit it, but the stores here are run fairly competently.

  • Pelosi's Rabbit||

    Well, as long as you don't want to buy your beer and your liquor in the same store. That would be crazy.

  • Surly Chef||

    On the one hand this is super annoying, on the other I can find obscure wine snob bottles on the edge of the hood. Disregarding the central issue of state run booze distribution of course.

  • Virginian||

    On the one hand this is super annoying, on the other I can find obscure wine snob bottles on the edge of the hood.

    I have a similar issue. VA has this:

    At the end of every year, restaurants must file
    a mixed beverage annual report that details alcohol sales and shows the
    ratio of food to liquor. ABC stipulates that each restaurant must sell
    enough food and soda to account for at least 45 percent of liquor and
    non-liquor sales, beer and wine excluded

    This means that there no real bars as such in Virginia. Every bar has to sell enough food to make their ratio. Which is obviously a huge violation of economic freedom. But in Richmond particularly, we have a lot of bars that also serve really good food.

  • BakedPenguin||

    Also, mixers and smokes.

    But I don't think I want them expanding into other areas.

  • ||

    New Hampshire: Live Free or Ask Permission

  • ||

    "!!The South!!"

    lulz

  • Heroic Mulatto||

    You think they would make the connection between onerous taxes on alcohol and the prevalence of moonshining.

  • Sevo||

    Just a coincidence.

  • Heroic Mulatto||

    Washington couldn't figure it out, what hope do they have?

  • ||

    Don't even get me started on Washington State.

    Need I remind you Epi and Dunphy live there?

  • Heroic Mulatto||

    Uhh...George, dude.

  • ||

    Who cares about that guy.

    He spoke an old version of English that is over 50 years old.

    Who knows what he was saying or doing way back when.

  • BakedPenguin||

    And he was a distiller, too.

  • Pelosi's Rabbit||

    Although I think she got Arkansas and Alaska confused somewhere along the line.

  • Fist of Etiquette||

    You want your 21st Amendment? Oh, you can have your 21st Amendment, but the states are gonna wet their beaks.

  • ||

    Which 21st Amendment? Lower De Boom?

  • Fist of Etiquette||

    You know how ignorant it is to capitalize for business purposes on something as hideous as the repeal of a law?

  • Notorious G.K.C.||

    So that's why my Revocation of the Edict of Nantes French restaurant wasn't popular?

  • ||

    What law? Their Hell or High Watermelon is a great poolside beer, you know, and I usually hate wheat beers.

  • Hyperion||

    Agree. The Brew Free or Die IPA is good also. One of the best beers from a can, ever.

  • Acosmist||

    I didn't do a careful analysis, but am I right in thinking states with a lot of business in alcohol form A tax alcohol form B or C a lot more? Protectionism?

  • Steve G||

    better get started on that careful analysis since "form A tax alcohol form B or C a lot more" makes no f'ing sense.

  • ||

    Nice to see California doesn't out-suck other states on at least one kind of tax.

  • ||

    Washington's liquor taxes are insane. You get taxed at 20.5%, and then on top of that there is a "volume tax", which is like $4/liter or something. So an $11, 1.75L bottle of Vodka of the Gods from Trader Joe's ends up being something close to $20. Yeah, it's that ridiculous. Buying actually expensive, high quality liquor gets even more absurd.

    Luckily, beer and wine taxes are super low. And I don't pay any taxes on weed at all!

  • The Last American Hero||

    That was part of the deal to privatize the liquor stores.

  • ||

    I don't think it was part of any deal; I think it was the politicians and liquor board scum going "fine, you bastards, your initiative to privatize the liquor stores passed, so we're going to tax the fuck out of you instead and hopefully you'll be so thrilled to have choice and convenience that you'll overlook the assraping". And so far, it seems to be working. Sigh.

  • Hyperion||

    beer taxes place a much heavier burden on low- and middle-income taxpayers than on the rich

    So why are the Democrats, champions of the poor, not all over this outrage?

    Why is Obama silent, and not saying that regulators are acting stupidly by taxing the poor like this?

    How about you, Shreeky, you gonna speak out about this? Or do you only drink sacrificial wine while worshipping your life size statues of Obama and Warren Buffet?

  • Palin's Buttplug||

    I am no champion of the poor. You don't see me supporting a minimum wage hike or food stamps.

    I just support the most secular capitalist that can win.

  • Hyperion||

    I just support the most secular capitalist crony that can win steal more with the help of government.

    Glad I could fix that for you. I'm here all day.

  • Invisible Finger||

    I just support the most secular capitalist that can win.

    Shreek finally admits to sucking authoritarian cock.

  • Hyperion||

    I think that he's always admitted to that. Just not in an honest and direct way.

  • mad libertarian guy||

    So why are the Democrats, champions of the poor, not all over this outrage?

    Becuase they are more concerned with the KULTUR WARZ, and in their book, beer is a poor redneck booze. The cultured drink wine.

  • Steve G||

    So why are the Democrats, champions of the poor, not all over this outrage?

    Seriously? Because they know better and can engineering a better life for them w/ booze taxes, soda bans and state-controlled wages.

  • Smilin' Joe Fission||

    Non-draft beer brewed in Ontario is taxed at 74.02 cents/litre or ~$2.80/gallon. And beer can only be sold in either a government run LCBO or a government monopoly enforced "Beer Store".

    Go fuck yourself Ontario.

  • SweatingGin||

    I get Canadian radio stations here. A few years ago (haven't bought blue in a while) -- they were advertising 18 packs of Labatt in bottles, for, I want to say $35.

    They were like $13 or $14 here.

  • Smilin' Joe Fission||

    $41.82/gallon of absolute ethyl alcohol Canadian Federal tax (page 8).. which is about $16.73/gallon for a 40% bottle of spirit. Am I doing this math correctly?

    $1.13/gallon of beer Federal tax.

    Can't find an Ontario tax rate on spirits in my searching.

  • Smilin' Joe Fission||

    Added to my comment on Ontario beer tax, the total tax I pay on beer here is: ~$3.93/gallon.

    And that's why the cheapest case of shitty beer is $30 here.

  • Smilin' Joe Fission||

    And add +4% markup on all liquor sold in Ontario to that. Page 10 of the link above.

  • NL_||

    You would think Caruthersville, MO would see a brisk trade in booze being in the second-lowest tax state immediately bordering the highest tax state.

  • Invisible Finger||

  • Paul.||

    taxes are the single most expensive ingredient in beer.”

    And cigarettes, and gas... and...

  • hotsy totsy||

    Colorado can have a low tax on gas, because soon we start taxing marijuana! (Or is that regressive?)

  • brokencycle||

    This doesn't include increased sales tax. MN has an extra ~2.5% in sales tax for liquor (bringing the tax up to almost 10%).

  • mountie464||

    Hmmm, as a Cincinnati resident and a raging wine alcoholic, why is $3-7 cheaper per bottle when I cross the bridge to KY?

  • Elizabeth Nolan Brown||

    Hmmm, as a Cincinnati native (who has crossed the bridge for booze many times) myself, that's a really good question ...

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