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November 28, 2018

Craft beer will come a higher price with upcoming Pennsylvania tax

Business Taxes
Carroll - Dock Street Brewing Thom Carroll/PhillyVoice

Dock Street Brewing's canning facility at 705 South 50th Street in West Philadelphia.

Though there's no shortage of craft breweries in and around Philadelphia, the state recently issued a tax bulletin that will mean a higher price attached to Pennsylvania-made brews.

Though sales tax on beer manufacturers has been part of the state's tax code for decades, a recent bulletin released by the Pennsylvania Department of Revenue highlights that a sales tax must also be collected when a beer manufacturer sells the product to a person without the purpose of redistributing it. In other words, breweries and tasting rooms should be collecting and remitting a sales tax.

The tax – the enactment of which was recently postponed and will begin July 1, 2019, instead of Jan. 1 – will be levied by the Pennsylvania Department of Revenue and put a new tax on malt and brewed beverage manufacturers selling out of their own establishments.

This will specifically target the holders of a "G" license, which is designated to breweries. Those license holders are subject to a 6 percent tax on every retail dollar sold once the tax takes effect. That would be 42 cents added to a $7 craft beer, for example.

The tax will be felt mostly by breweries and taprooms, but it doesn't apply to other bars or restaurants that also serve craft beer. This means brews made and sold at places such as Evil Genius or Tired Hands would be subject to the tax, but that same beer sold at Johnny Brenda's or Standard Tap would not have it.

According to the York Daily Record, craft and independent breweries contributed $6.3 billion toward the Pennsylvania economy in 2017. PA's craft breweries also produced more beer in 2017 than any other state.

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