Lena Savoie
Alcohol excise taxes in Connecticut have a long history, with the state imposing sales taxes on alcohol sales since 1968. Over the years, Connecticut has increased its excise tax on alcoholic beverages multiple times, with the latest change being a 10% hike in 2019. The state's alcohol excise tax rates vary based on the type of beverage, including beer, wine, and distilled spirits, and are typically calculated per volume. These taxes are applied to direct-to-consumer shipments and are often included in the beverage's price, ultimately impacting the consumer.
| Characteristics | Values |
|---|---|
| Tax rate | 20% increase on the existing tax on alcoholic beverages since 1 July 2011 |
| Tax base | Volume: per barrel, fraction of a barrel, or wine gallon (128 ounces) for beer; per wine gallon for wine; and either per wine gallon or per proof gallon for distilled spirits |
| Tax type | Excise tax, floor tax, markup tax, gallonage-based excise tax |
| Tax incidence | Paid by liquor vendors, brewers/distillers, alcoholic beverage retailers, and consumers |
| Tax collection | Alcohol and Tobacco Tax and Trade Bureau |
| Tax filing | Form FT-AFT, Form FT-22-S |
| Tax payment deadline | 15 November 2019 |
| Penalty for non-compliance | Revocation of state license or permit, interest at 1% per month, late payment penalty of 10% of the tax due or $50, whichever is greater |
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What You'll Learn
Connecticut's excise tax on alcohol
Connecticut imposes an excise tax on beer, wine, and distilled spirits. The tax is based on volume: per barrel, fraction of a barrel, or wine gallon (128 ounces) for beer; per wine gallon for wine; and either per wine gallon or per proof gallon for distilled spirits. Connecticut has increased its excise tax on alcoholic beverages three times since 1968, including a 20% increase on July 1, 2011, a 100% increase on March 23, 1989, and another 20% increase on August 1, 1983.
The state's tax on beer is the fourth highest in the region, lower than in Maine, New Hampshire, and Vermont, but higher than in neighbouring New York, Massachusetts, and Rhode Island. Connecticut's tax on wine is the second highest in the region, after New Jersey, and its tax on liquor is the third highest, behind New York and New Jersey.
In addition to the state excise tax, liquor vendors in Connecticut must also pay Federal excise taxes, which are generally passed on to the consumer in the beverage's price. The Federal excise tax rate is adjusted depending on the percentage of alcohol in the product. For example, beer and other malt liquors containing more than one-half of one percent of absolute alcohol by volume are taxed at a specific rate, while alcoholic cider containing not more than 7% of absolute alcohol is taxed at the lower beer rate.
Connecticut's tax legislation also includes a 10% increase in excise tax on the sale of alcoholic beverages other than beer made by licensed distributors, effective October 1, 2019. This resulted in alcoholic beverage retailers, such as package stores, restaurants, and hotels, paying a one-time floor tax on their inventory as of that date.
The floor tax is a catch-up tax on items retailers already had in stock prior to the rate increase. It is imposed on the inventory of alcoholic beverages held by retailers, including grocery stores, package stores, restaurants, taverns, bars, and hotels. Retailers must take an inventory of all alcoholic beverages owned and held within Connecticut at the beginning of the period in which the tax increase takes effect.
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Federal excise tax on alcohol
Federal excise taxes are levied on alcoholic beverages in Connecticut, and these are collected from the brewer/distiller by the Alcohol and Tobacco Tax and Trade Bureau. These federal taxes are generally passed on to the consumer in the beverage's price. Liquor vendors in Connecticut are responsible for paying a state excise tax of $5.40 per gallon, plus federal excise taxes, for all liquor sold.
Federal excise tax rates on beer, wine, and liquor vary according to alcohol content, place of production, size of container, or place of purchase (on- or off-premise, or on board airlines). Case fees and/or bottle fees may also be included, which can vary with the size of the container. Additional sales taxes specific to alcoholic beverages may be applied, as well as wholesale tax rates, and retail and distributor license fees.
At the federal level, spirits are subject to a tiered tax system. Federal rates are $2.70 per proof gallon on the first 100,000 gallons per calendar year, $13.34 per proof gallon for more than 100,000 gallons but less than 22.23 million, and $13.50 per proof gallon for more than 22.23 million gallons. A proof gallon is a gallon of liquid that is 100 proof, or 50% alcohol. The tax is adjusted, depending on the percentage of alcohol in the product.
Excise taxes are commonly levied on specific goods or activities, such as cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting. These taxes typically make up a relatively small and volatile portion of state, local, and federal tax collections.
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Alcohol floor tax
In Connecticut, liquor vendors are responsible for paying a state excise tax of $5.40 per gallon, plus Federal excise taxes, for all liquor sold. The price of alcohol sold in the state also includes Federal alcohol excise taxes, which are generally passed on to the consumer.
In 2011, the state imposed a 20% tax increase on alcoholic beverages, to be applied to each type of alcoholic beverage already in the inventory of retailers. This was commonly referred to as a "floor tax", and it came into effect on July 1, 2011. It applied to alcoholic beverage inventories held at the opening of business on that date, including those ordered prior to July 1 and delivered by July 8. Retailers were required to take an inventory of all alcoholic beverages owned and held within Connecticut at the opening of business on July 1, 2011, and to use Form FT-AFT to calculate, report, and pay the floor tax on their inventory.
The floor tax rate was dependent on the type of alcoholic beverage, with different rates for beer, wine, and liquor. Beer in barrels, for example, was taxed at $0.62 per barrel, while still wines containing not more than 14% alcohol by volume were taxed at $0.01 per wine gallon. Retailers were required to use Form FT-22-S to calculate the quantities of alcoholic beverages subject to the floor tax and then apply the floor tax rate using Form FT-AFT.
Failure to file Form FT-AFT and pay the floor tax could result in the revocation of any state licenses or permits, interest charges, and late payment penalties.
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Tax on alcohol sold DTC
In Connecticut, excise taxes are imposed on beer, wine, and distilled spirits. The tax is based on volume: per barrel, fraction of a barrel, or wine gallon (128 ounces) for beer; per wine gallon for wine; and either per wine gallon or per proof gallon for distilled spirits. Connecticut has increased its excise tax on alcoholic beverages three times since 1968, including a 10% increase effective October 1, 2019, and a 20% increase that took effect on July 1, 2011. The tax was also doubled in 1989.
When it comes to direct-to-consumer (DTC) shipments of alcohol in Connecticut, tax requirements can become more complex. Licensed alcohol shippers are generally required to register for sales tax in most states, and sales and use tax may be applied at the state, county, city, or special district level. In addition to sales tax, traditional "gallonage"-based excise taxes are typically due on DTC shipments. While these excise taxes are often factored into the price of the item and not passed on to the consumer, there are cases where they must be paid by the consumer.
For wine sold and shipped directly to consumers in Connecticut, there are specific packaging and labelling requirements. The containers must be conspicuously labelled to indicate alcoholic content, and a signature from an individual aged 21 or older is necessary for delivery. These rules help ensure that alcohol is delivered and consumed responsibly.
It is important to note that tax laws can change frequently, and there may be additional regulations or updates not mentioned here. The information provided offers a general overview of the tax landscape for alcohol sold DTC in Connecticut, highlighting the excise taxes and regulations specific to this state.
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Connecticut's alcohol tax history
Since 1968, Connecticut has increased its excise tax on alcoholic beverages three times. Taxes on most types of alcohol were increased by 20% on August 1, 1983, 100% on March 23, 1989, and 20% on July 1, 2011.
Connecticut has also reduced taxes on two categories of alcoholic beverages since 1968:
- Wine with no more than 21% alcohol produced by someone who produces a maximum of 55,000 wine gallons per year.
- Liquor coolers with no more than 7% alcohol.
Even with the most recent 20% across-the-board increase in 2011, alcohol taxes on those two categories are currently lower than they were in 1968.
Connecticut imposes an excise tax on beer, wine, and distilled spirits. The tax is based on volume: per barrel, fraction of a barrel, or wine gallon (128 ounces) for beer; per wine gallon for wine; and either per wine gallon or per proof gallon for distilled spirits.
In Connecticut, liquor vendors are responsible for paying a state excise tax of $5.40 per gallon, plus Federal excise taxes, for all liquor sold. The price of all alcohol sold in Connecticut also includes Federal alcohol excise taxes, which are generally passed on to the consumer in the beverage's price.
Connecticut also imposes sales taxes on alcohol sales, as do six of the eight surrounding states.
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Frequently asked questions
In Connecticut, liquor vendors are responsible for paying a state excise tax of $5.40 per gallon, plus Federal excise taxes, for all liquor sold. The Federal excise tax rates vary depending on the percentage of alcohol in the product.
A floor tax is a tax on the inventory of retailers of alcoholic beverages. It is a one-time tax that is imposed when there is a change in the excise tax rate.
Since 1968, Connecticut has increased its excise tax on alcoholic beverages three times, including in 1983, 1989, and 2011.
In addition to excise taxes, Connecticut also imposes sales taxes on alcohol sales. There may also be taxes on direct-to-consumer (DTC) shipments, which can be either "markup" taxes or "gallonage" taxes.
Connecticut's tax on beer is the fourth highest in the region, while its tax on wine is the second highest and its tax on liquor is the third highest. Six of the nine states in the region, including Connecticut, apply state sales tax to alcohol purchases.
