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Alcohol Tax by State [Updated June 2023]
Alcoholic drinks contain ethanol, an alcohol made through fermentation. Beer and wine are fermented drinks, while spirits go through an additional process called distillation. In the United States, "a drink" has 0.6 ounces of pure alcohol in it. "One drink" is: 12 ounces of beer, 8 ounces of malt liquor, 5 ounces of wine, and 1.5 ounces of 80-proof distilled spirits or liquor (40% alcohol proof). Alcohol is a regulated drug. The legal drinking age in the United States is 21. While it plays an important social role in many cultures, drinking alcohol can slow down motor functions and reaction times and slur speech. Additionally, excessive alcohol consumption over time can cause several health problems, including heart problems, liver disease, and cancers such as liver, neck, and esophageal cancer.
Alcohol Tax by State
An alcohol excise tax is usually a tax on a fixed quantity of alcohol. Producers, importers, wholesalers, and sometimes retailers pay alcohol taxes; however, the costs of these taxes are passed down to consumers through increased prices. The excise taxes paid by producers, importers, wholesalers, and retailers increase the amounts used to calculate sales tax; therefore, consumers then pay sale tax on the excise taxes.
The federal government collects approximately $1 billion per month from excise alcohol taxes on spirits, beer, and wine. Taxes on spirits are significantly higher than beer and wine at $13.50 per gallon, while beer is taxed at $18 per barrel and wine is $1.07-$3.40 per gallon. This is because spirits have higher alcohol content than the other categories.
In Wyoming and New Hampshire, all wine and spirits must be bought at government monopoly stores. Both states gain enough revenue directly from alcohol sales through government-run stores and have set prices low enough to be comparable to buying spirits without taxes. Washington has the highest spirits tax in the United States at $33.22 per gallon. This is over $10 more than the second-highest tax in the state of Oregon at $21.95. Following these two states is Virginia with $19.89, Alabama with $19.11, and Utah with $15.92.
- Some states directly control the sales of distilled spirits (and occasionally wine). As such, there is no state sales tax on distilled spirits in these states, so the tax is listed as 0.00%.
- In some states, the tax rate for a given type of alcohol is variable. In these cases, the tax rates shown pertain to beer with ABV > 3.2% and sold in bottles or cans (kegs and barrels have different rates), still wines rather than sparkling, and spirits with ABV ? 50%.