Pennsylvania passes craft brewery tax code change, supported by the state’s guild

For over 18 months, the Brewers of Pennsylvania (BOP), the state’s official brewers guild, worked with state legislators and the Governor’s office to avoid a large, across-the-bar sales tax that would have slowed the craft beer momentum in Pennsylvania. The result is the passing of HB 262 by the Pennsylvania General Assembly on June 28.

On July 27, 2018, the Pennsylvania Department of Revenue (DOR) put out a tax bulletin requiring Pennsylvania breweries to collect a 6 percent sales tax for every dollar of beer sold directly to consumers via taprooms, tasting rooms, and brewpubs. The application of this tax was set to go into effect July 1, 2019.

Believing this taxation would negatively impact PA breweries in all 67 counties, while stifling a growing industry that provides thousands of jobs for local communities, the BOP reports that the Tax Code has been amended to “bring fairness and parity to sales tax collection among restaurants, taverns, grocery stores, and brewery taprooms across the Commonwealth,” according to the group. 

What’s changed?

Under the bill amending the Tax Code, which the BOP expects the governor to sign, Pennsylvania breweries will pay 6 percent sales tax on 25 percent of the retail sale to its consumer. This formula will balance a sales tax assessment as if it is being assessed on the wholesale price amount, similar to what restaurants, taverns, and grocery stores pay.  Other county taxes imposed on sales are preserved and this amendment only clarifies any confusion surrounding breweries paying sales tax on consumer sales at their premises. 

The change will affect a brewery’s sales to consumers for both on and off premise consumption. The BOP expects the current DOR bulletin will be suspended and replaced with this new tax law. 

“The Brewers of Pennsylvania, in conjunction with the Governor’s office, worked to bring fairness and parity to sales tax collection among restaurants, taverns, grocery stores, and brewery taprooms across Pennsylvania,” said Chris Lampe, BOP President. “This is a big legislative win for BOP members and non-members across the state, and we look forward to further collaborations with the Governor and Pennsylvania legislators to level the playing field for our great Pennsylvania brewing industry.”

The passing of the new law will impact operations and Point of Sale systems for all Pennsylvania brewers. The BOP will detail the amended tax code, address key learnings, and provide helpful insights at the association’s Mid-Atlantic Brewers Symposium September 5-6 in State College. BOP members and non-members are strongly encouraged to attend.