Lena Savoie
Alcoholic beverages in Texas are subject to a variety of taxes, including excise taxes, mixed beverage gross receipts tax, and mixed beverage sales tax. The Texas Alcoholic Beverage Commission (TABC) issues permits for the sale of alcoholic beverages, and the type of permit obtained determines the applicable taxes. For example, a mixed beverage permittee is subject to both mixed beverage taxes, while a wine and malt beverage retailer's permittee is only subject to sales and use tax. The mixed beverage gross receipts tax rate is 6.7%, while the mixed beverage sales tax rate is 8.25%. In addition, excise taxes are applied per unit, typically per gallon for liquids, and are collected from the merchant, who usually passes the cost on to the consumer. Liquor in Texas is subject to an excise tax of $2.40 per gallon, while beer and wine have lower tax rates.
| Characteristics | Values |
|---|---|
| Type of tax | Mixed Beverage Gross Receipts Tax, Mixed Beverage Sales Tax, Excise Tax |
| Tax rate | 6.7% (gross receipts tax), 8.25% (sales tax), 6.25% (sales tax), 14.95% (on-premise), 0.05/drink (airline sales) |
| Taxpayers | Mixed beverage permittees, alcohol vendors, brewers/distillers |
| Tax exemptions | Foreign diplomatic and consular personnel, qualifying nonprofit organizations, volunteer fire departments, religious, educational, and public service organizations, university and college student organizations |
| Penalties | $50 for each report filed after the due date, 5% penalty if paid 1-30 days late, 10% penalty if paid over 30 days late |
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What You'll Learn
Mixed Beverage Sales Tax
In Texas, alcoholic beverages are subject to excise taxes on both the state and federal levels. Excise taxes are applied per unit, typically per gallon for liquids, and are collected from the merchant who sells the alcohol. However, these taxes are usually passed on to the consumer in the form of higher alcohol prices.
In Texas, liquor vendors are responsible for paying a state excise tax of $2.40 per gallon, plus federal excise taxes, for all liquor sold. Beer is taxed at an additional $0.194 per gallon, and wine has a tax rate of $0.204 per gallon. Sparkling wine or wine with an alcohol content above 14% is taxed at an additional $0.408 per gallon.
In addition to these excise taxes, Texas also levies a mixed beverage sales tax. This tax applies to the sale of mixed beverages, which include distilled spirits, beer, ale, and wine, as well as non-alcoholic beverages and ice intended to be mixed with alcohol and consumed on the premises. The mixed beverage sales tax rate is 8.25%, and it is paid by the customer to the seller, who then remits it to the state.
There are some exemptions to the mixed beverage sales tax. Foreign diplomatic and consular personnel with a valid tax exemption card are exempt from paying the tax. Additionally, nonprofit organizations that qualify for exemption under Texas Tax Code Sections 151.310 and 151.321 may sell alcoholic beverages tax-free during authorised fundraising sales or auctions. Similarly, volunteer fire departments that qualify for exemption under Tax Code § 151.310(a)(4) are exempt from the mixed beverage sales tax when selling alcohol during fundraising events.
Permit holders are required to file a monthly mixed beverage sales tax report, even if no sales of alcoholic beverages were made during the month. Failure to file this report on time can result in a $50 penalty, as well as additional penalties if the tax is paid after the due date.
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Mixed Beverage Gross Receipts Tax
In Texas, sales of alcoholic beverages can give rise to two types of taxes: Mixed Beverage Gross Receipts Tax and Mixed Beverage Sales Tax.
The Mixed Beverage Gross Receipts Tax is a tax on the total amount received from the sale, preparation, or service of mixed beverages, which include distilled spirits, beer, ale, and wine. It also applies to the sale of ice and non-alcoholic beverages that are intended to be mixed with alcoholic drinks and consumed on the premises. The tax rate for the Mixed Beverage Gross Receipts Tax is 6.7%. This tax is paid by the permittee (seller) to the state, and it is not passed on to the customer. The person or organization holding the mixed beverage permit is responsible for paying this tax and cannot add it as a separate charge to the selling price.
Mixed Beverage Sales Tax
The Mixed Beverage Sales Tax is a tax imposed on each mixed beverage sold, prepared, or served by a permittee, as well as on ice and non-alcoholic beverages intended to be mixed with alcohol and consumed on the premises. The tax rate for the Mixed Beverage Sales Tax is 8.25%. Unlike the Mixed Beverage Gross Receipts Tax, this tax can be passed on to the customer by adding a line item on the bill or including it in the sales price.
Exemptions and Special Cases
There are some exemptions and special cases for these taxes. For example, foreign diplomatic and consular personnel with a valid tax exemption card are exempt from paying the Mixed Beverage Sales Tax. Additionally, nonprofit organizations that qualify for exemption under certain sections of the Texas Tax Code may sell alcoholic beverages tax-free during qualifying fundraising events.
Other Taxes on Alcoholic Beverages in Texas
In addition to the Mixed Beverage Gross Receipts Tax and Mixed Beverage Sales Tax, alcoholic beverages in Texas are also subject to excise taxes at both the state and federal levels. Wine vendors pay a state excise tax of $0.20 per gallon, while liquor vendors pay $2.40 per gallon. These excise taxes are typically passed on to the consumer in the form of higher alcohol prices.
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Excise Taxes
Alcoholic beverages in Texas are subject to excise taxes, which are implemented by every state and are applied on a per-unit basis, typically per gallon for liquids. Excise taxes are collected from the merchant and are usually passed on to the consumer in the form of higher alcohol prices. Texas imposes a state excise tax on wine, beer, and liquor (which includes most hard alcohols).
Wine vendors in Texas are responsible for paying a state excise tax of $0.20 per gallon, plus Federal excise taxes, for all wine sold. Additional taxes apply to sparkling wine and wine with an alcohol content above 14%. Liquor vendors, on the other hand, pay a state excise tax of $2.40 per gallon, plus Federal excise taxes, for all liquor sold. Beer is taxed at an additional 19.4 cents per gallon.
In addition to excise taxes, Texas also levies mixed beverage taxes on the sale of alcoholic beverages. These include the Mixed Beverage Gross Receipts Tax and the Mixed Beverage Sales Tax. The Mixed Beverage Gross Receipts Tax is paid by the permittee (seller) to the state and is based on the total amount received from the sale, preparation, or service of mixed beverages. The current rate for this tax is 6.7%. The Mixed Beverage Sales Tax, on the other hand, is paid by the customer to the seller, who then remits it to the state. This tax applies to each mixed beverage sold, prepared, or served by a permittee for on-premises consumption. The rate for this tax is 8.25%.
There are certain exemptions to the mixed beverage taxes. For example, nonprofit organizations that qualify for exemption under Texas Tax Code Sections 151.310 and 151.321 may sell alcoholic beverages tax-free during authorised fundraising sales or auctions. Additionally, foreign diplomatic and consular personnel with a valid tax exemption card are exempt from paying the mixed beverage sales tax.
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Federal Alcohol Excise Taxes
Alcoholic beverages in Texas are subject to excise taxes, which are applied on a per-unit basis, typically per gallon for liquids. Excise taxes are collected from the merchant and almost always passed on to the consumer in the form of higher alcohol prices. The primary excise taxes on alcohol in Texas are on wine, beer, and liquor (which includes most types of hard alcohol).
The economic justifications for special taxes on alcohol are based on reducing the external harms associated with alcohol consumption, such as drunk driving, intoxicated violence, and property damage. Excise taxes increase market prices and decrease consumption, thereby reducing the negative consequences of alcohol consumption. Alcohol taxes also generate revenue that can be used to fund anti-addiction programs, enforce and incentivize sober driving, and support education initiatives.
In Texas, mixed beverage permittees, as defined in Tax Code 183.001(b), must collect and remit a mixed beverage sales tax on each mixed beverage (distilled spirits, beer, ale, and wine) they sell, prepare, or serve. This tax also applies to non-alcoholic beverages and ice sold to be mixed with alcoholic drinks for on-premises consumption. The mixed beverage sales tax rate is 8.25%, and it can be passed on to the customer by adding a line item on the bill or including it in the sales price.
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Local Taxes
Alcoholic beverages in Texas are subject to a variety of local taxes, which are imposed by the state and federal governments. These taxes vary depending on the type of alcohol and the manner in which it is consumed.
Mixed Beverage Gross Receipts Tax and Mixed Beverage Sales Tax
The state of Texas levies two types of taxes on the sale of alcoholic beverages: the Mixed Beverage Gross Receipts Tax and the Mixed Beverage Sales Tax. The Mixed Beverage Gross Receipts Tax is paid by the permittee (seller) to the state, and it is based on the total amount received from the sale, preparation, or service of mixed beverages. The current rate for this tax is 6.7%.
The Mixed Beverage Sales Tax, on the other hand, is paid by the customer to the seller, who then remits it to the state. This tax is imposed on each mixed beverage sold, prepared, or served by a permittee, as well as on ice and non-alcoholic beverages intended to be mixed with alcohol and consumed on the premises. The Mixed Beverage Sales Tax rate is currently 8.25%.
Excise Taxes
In addition to the Mixed Beverage taxes, alcoholic beverages in Texas are also subject to excise taxes at both the state and federal levels. Excise taxes are applied on a per-unit basis, typically per gallon for liquids. Wine vendors in Texas are responsible for paying a state excise tax of $0.20 per gallon, plus federal excise taxes. For liquor, the state excise tax is $2.40 per gallon, and for beer, an additional $0.194 is added. Sparkling wine or wine with an alcohol content above 14% is subject to an additional excise tax of $0.408 per gallon.
Local Sales Taxes
Exemptions
Certain organisations and entities are exempt from paying the Mixed Beverage Sales Tax. These include governmental entities, nonprofit organisations, and foreign diplomatic and consular personnel who present a valid tax exemption card. Additionally, volunteer fire departments that qualify for exemption may sell alcohol without paying the Mixed Beverage Sales Tax during authorised fundraising events.
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Frequently asked questions
There are two types of taxes on alcohol sales in Texas: Mixed Beverage Gross Receipts Tax and Mixed Beverage Sales Tax. The Mixed Beverage Gross Receipts Tax rate is 6.7%, while the Mixed Beverage Sales Tax rate is 8.25%.
The Mixed Beverage Gross Receipts Tax is paid by the seller, while the Mixed Beverage Sales Tax is paid by the customer.
A Mixed Beverage is any beverage containing more than 0.5% of alcohol by volume. This includes beer, wine, distilled spirits, and ale.
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