Report: Washington state’s beer tax ranks in the middle of the pack
(The Center Square) – Washington state has the 25th highest beer tax in the nation, according to a report from the Tax Foundation.
The state levies a tax of 26 cents per gallon of beer. In Washington, beer vendors are responsible for paying that excise tax, plus federal excise taxes, for all beer sold.
The Washington, D.C.-based think tank compiled the report to see where consumers pay the highest taxes for their beer.
“The United States collects an excise tax on beer at the federal level (ranging from $0.11 to $0.58 per gallon based on production, location, and quantity),” the Tax Foundation study said. “At the state level, all 50 states and the District of Columbia collect their own taxes on fermented malt beverages. General sales taxes from state, and sometimes municipal governments, are tacked on after the prices of goods are subtotaled.”
The Tax Foundation report notes the role taxes play in the price of beer.
“Taxes are the single most expensive ingredient in beer, costing more than the labor and raw materials combined," according to a report from the Beer Institute referenced in the Tax Foundation report.
The Beer Institute, also based in the nation’s capital, represents an industry of 6,600 brewers and nearly 2.4 million jobs.
According to the Beer Institute, consumers may not realize how much taxes have contributed to the final price of the beer they purchase.
“State excise taxes are often levied on the manufacturer, wholesaler, or retailer of beer,” the Beer Institute report said. “The states collect these excise taxes according to the quantity of beer sold (usually expressed as a rate of dollars per gallon). In these cases, consumers won't see the tax as an additional excise tax at checkout; the tax will already be priced into the retailer's sales price.”
Relying on a 2005 economic analysis by Global Insight/Parthenon Group, the Beer Institute concluded that the layers of taxation on production and distribution make up more than 40% of the retail price for beer.
Washington residents consumed just under 25 gallons of beer per capita in 2021, according to Beer Info, ranking No. 45 out of all 50 states and the District of Columbia in terms of the amount of suds downed.
The Evergreen State’s middling beer tax ranking is in contrast to its tax on distilled spirits – nearly $37 a gallon, the highest in the nation, according to a Tax Foundation report from last month.