Vivian Marlowe
Alcohol excise taxes are implemented by every US state, and these are applied on a per-unit basis, usually per gallon for liquids. In Idaho, wine vendors are responsible for paying a state excise tax of $0.45 per gallon, while beer vendors pay $0.15 per gallon. The state excise tax on liquor is $10.90 per gallon, one of the highest in the country. These taxes are usually passed on to the consumer in the form of raised alcohol prices.
| Characteristics | Values |
|---|---|
| Excise taxes on alcohol | Implemented on both the Idaho and Federal levels |
| Excise taxes applied on | Per-unit basis, generally per gallon for liquids |
| Excise taxes collected from | Merchant who sells the alcohol |
| Excise taxes passed on to | Consumer in the form of raised alcohol prices |
| Primary excise taxes on | Wine, beer, and liquor |
| Wine vendors pay | $0.45 per gallon, plus Federal excise taxes |
| Beer vendors pay | $0.15 per gallon, plus Federal excise taxes |
| Liquor vendors pay | $10.90 per gallon |
| Spirits taxed the least in | Wyoming and New Hampshire |
| Spirits taxed the most in | Washington state ($36.55 per gallon) |
| Second-highest tax in | Oregon ($22.85) |
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What You'll Learn
Excise taxes on wine, beer, and liquor
Excise taxes are applied on a per-unit basis, 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 Idaho, excise taxes are levied on wine, beer, and liquor (which includes most types of hard alcohol).
Wine
Wine vendors in Idaho are responsible for paying a state excise tax of $0.45 per gallon, in addition to federal excise taxes, for all wine sold. This rate is lower than 72% of the other states.
Beer
Beer vendors in Idaho pay a state excise tax of $0.15 per gallon, plus federal excise taxes, for all beer sold. This rate is lower than 76% of the rates in other states.
Liquor
The excise tax on liquor in Idaho is $10.90 per gallon, which is one of the highest liquor taxes in the country. This rate is the tenth-highest out of the 50 states. The Idaho state government owns all distilled liquor and spirits distributors in the state, and the excise tax is determined by the Distilled Spirits Council of the United States (DISCUS).
It is worth noting that distilled spirits have the stiffest tax rates of all alcoholic beverages due to their higher alcohol content. Across states, the government operates a monopoly of state-controlled liquor stores in 17 states, where prices can be artificially inflated instead of levying a formal tax.
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Federal excise taxes
The federal government collects approximately $1 billion per month from excise taxes on spirits, beer, and wine. Spirits are taxed at a significantly higher rate than beer and wine due to their higher alcohol content. The federal excise tax on spirits is $13.50 per gallon, while beer is taxed at $18 per barrel, and wine is taxed at a rate between $1.07 and $3.40 per gallon.
In Idaho, wine vendors are responsible for paying a state excise tax of $0.45 per gallon, plus federal excise taxes, for all wine sold. Beer vendors must pay a state excise tax of $0.15 per gallon, plus federal excise taxes. The state excise tax on liquor in Idaho is $10.90 per gallon, which is one of the highest liquor taxes in the country.
Excise taxes are not generally deductible on federal tax returns. However, the IRS occasionally allows certain excise taxes to be deducted for specific tax years. For example, excise taxes paid on long-distance phone calls between 2003 and 2006 could be deducted from federal tax returns.
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Sales tax on alcohol
Alcoholic beverages like wine, beer, and liquor are subject to excise taxes on both the Idaho state and federal levels. Excise taxes are flat per-unit taxes that are collected from the merchant who sells the alcohol, rather than the end consumer. However, these taxes are usually passed on to the consumer in the form of raised alcohol prices. In Idaho, wine vendors are responsible for paying a state excise tax of $0.45 per gallon, plus federal excise taxes, for all wine sold. Beer vendors must pay a state excise tax of $0.15 per gallon, also in addition to federal excise taxes. The Idaho excise tax on liquor is $10.90 per gallon, one of the highest liquor taxes in the country.
In some states, the tax rate for a given type of alcohol is variable. For example, in some states, the tax rates shown pertain to beer with ABV > 3.2% sold in bottles or cans (kegs and barrels have different rates), still wines rather than sparkling, and spirits with ABV ≤ 50%. Alcoholic drinks contain ethanol, a product of fermentation. Beer and wine are fermented drinks, while spirits go through distillation, resulting in higher alcohol content. This higher alcohol content is one of the reasons why distilled spirits face the stiffest tax rates of all alcoholic beverages.
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. Washington state levies the greatest excise tax rate on distilled spirits, at $36.55 per gallon, with Oregon in second place at $22.85.
In addition to excise taxes, sales taxes may also be applied to alcohol. Licensed alcohol shippers are required to register for sales tax in most states, independent of economic or physical nexus. Depending on the state, sales and use tax can be applied at the state, county, city, or special district levels. Some states have "markup" taxes, where the retail value of the alcohol is multiplied by a percentage rate. Most of these markup taxes are passed through to the consumer. Excise taxes paid by producers, importers, wholesalers, and retailers increase the amounts used to calculate sales tax; therefore, consumers pay sales tax on the excise taxes.
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Alcohol tax rates in other US states
Alcohol tax rates vary across US states, with each state implementing its own excise taxes on wine, beer, and liquor. These taxes are typically paid by the merchant and then passed on to the consumer in the form of raised alcohol prices. Here is a look at the alcohol tax rates in a few other US states:
Washington
Washington state levies one of the highest excise tax rates on distilled spirits in the country, at $36.55 per gallon, or $33.22 per gallon according to another source. This is significantly higher than the rates in other states and is reflective of the government's control over the sale of distilled spirits.
Oregon
Oregon has the second-highest excise tax rate on spirits in the nation, at $22.85 per gallon, or $21.95 per gallon as per another source. This rate is still considerably higher than many other states.
Virginia
Virginia's excise tax on distilled spirits is $22.04 per gallon, placing it among the top five states with the highest rates. This tax rate contributes to the overall cost of purchasing spirits in the state.
Wyoming and New Hampshire
Wyoming and New Hampshire are what are known as "control states," where the government gains revenue directly from alcohol sales through government-run stores. While the excise tax rates on spirits in these states are among the lowest in the country, the government can set prices comparable to buying spirits without taxes.
Missouri, Colorado, and Texas
These states have some of the lowest excise tax rates on distilled spirits in the country. Missouri's tax rate is $2.00 per gallon, Colorado's is $2.28, and Texas has a rate of $2.40 per gallon. These low tax rates contribute to a more affordable overall cost of purchasing spirits in these states.
The variation in alcohol tax rates across US states highlights the complex tax environment surrounding distilled spirits and other alcoholic beverages. Each state's policies and tax structures influence the final prices that consumers pay for alcohol.
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How alcohol taxes are calculated
Alcohol taxes in Idaho are known as "sin taxes" and are collected on alcoholic beverages such as wine, beer, and liquor. Excise taxes on alcohol are implemented by every state and are applied on a per-unit or per-gallon basis. In Idaho, wine vendors are responsible for paying a state excise tax of $0.45 per gallon, plus federal excise taxes, for all wine sold. Beer vendors pay a state excise tax of $0.15 per gallon, plus federal excise taxes. The Idaho liquor tax applies to all hard alcohol and is included in the purchase price by the retailer. The excise tax on liquor in Idaho is $10.90 per gallon, one of the highest liquor taxes in the country.
Alcohol taxes are selective sales taxes on the purchase of alcohol, levied as an amount per unit sold (per gallon of beer, wine, or liquor). These taxes are typically remitted by producers and distributors during wholesale transactions, and the cost is then incorporated into the final retail price, ultimately paid by the consumer. Excise taxes are collected from the merchant who sells the alcohol, but they are almost always passed on to the consumer in the form of raised alcohol prices.
The rate of alcohol excise taxes is based on the type of alcohol, with liquor taxed at a higher rate than wine, and wine taxed at a higher rate than beer. Spirits are taxed at a higher rate than beer and wine due to their higher alcohol content. In some states, tax rates vary based on the location of the seller and the quantity produced. For example, Georgia's excise tax rate on wine produced outside of the state is nearly four times higher than for wines produced in Georgia.
In addition to per-gallon excise taxes, some states and localities levy a special sales tax on the final purchase price of alcohol. For example, the District of Columbia levies per-gallon taxes on beer, wine, and liquor, as well as a 10.25% alcohol sales tax on the final purchase price. Alcohol tax revenue primarily comes from state taxes, with state and local governments collecting substantial revenue from government-owned liquor stores through various taxes, fees, price mark-ups, and net profits.
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Frequently asked questions
Alcoholic beverages in Idaho are subject to excise taxes on both the state and federal levels. The state excise tax on beer is $0.15 per gallon, on wine is $0.45 per gallon, and on liquor is $10.90 per gallon.
Excise taxes on alcohol are paid by the merchant who sells the alcohol rather than the end consumer. However, in most cases, the excise tax is passed on to the consumer in the form of raised alcohol prices.
Idaho's beer excise tax is ranked #38 out of the 50 states, and its wine excise tax is ranked #36. Idaho's liquor tax is one of the highest in the country, ranked #10 out of 50 states.
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