by Are you a distillery, brewery or winery/cidery in New York State? If so, there is a substantial NY spirits tax credit available to you based on the quantity of product that you bottle each year.
| Commodity | Rebate | Cap, gal | Max Rebate Amt | Effective Bottle COGS Discount |
| Beer, Cider | $0.14/gal | 500,000 | $70,000 | 355ml: 1.3 cents |
| Wine | $0.30/gal | 500,000 | $150,000 | 750ml: 5.9 cents |
| Spirits < 24% & > 2% | $2.54/gal | 500,000 | $1,270,000 | 750ml: 50.3 cents |
| Spirits > 24% | $6.44/gal | 500,000 | $3,220,000 | 750ml: $1.27 |
Above 500,000 gallons, there is an additional NY spirits tax credit allowed, but it is much smaller on a gallonage basis. The caps specified here are counted after hitting the 500,000 gallons specified above:
| Commodity | Rebate | Additional Cap, gal | Max Rebate Amt | Effective Bottle COGS Discount |
| Beer, Cider | $0.045/gal | 15 million | $675,000 | 355ml: 0.4 cents |
| Wine | $0.045/gal | 15 million | $675,000 | 750ml: 0.9 cents |
| Spirits < 24% & > 2% | $0.045/gal | 300,000 | $13,500 | 750ml: 0.9 cents |
| Spirits > 24% | $0.045/gal | 300,000 | $13,500 | 750ml: 0.9 cents |
According to guidance from NYSLA, this credit:
- Reduces your New York State tax burden, except that you may not eliminate the “MTA surcharge” business tax, nor may it reduce your tax below the fixed dollar minimum tax.
- Is considered an “overpayment” and can be refunded or applied to the next year’s tax if you have more credit than tax liability.
- Applies to “Production” which is defined further as “Bottling” (quantities you report for the credit flow through from the MT-456 report’s “Produced” quantity, which is “Bottling”).
This credit is compelling because it appears to apply whether you sell in NY or not, and because a distillery can theoretically get as much as $4,517,000 per annum in credits if fully maximized.
No matter what, this is a substantial amount of cash. But if you are competing in the “value spirits” world, a credit of $1.27 per bottle is enough to give you a significant competitive advantage, even against producers in states with much lower operating costs.
For reference, the Federal Excise Tax burden on an 80 proof 750ml bottle of spirits is $2.11 for a large producer at the higher $13.34/PG tax rate. One way to look at this credit is that it significantly reduces your effective FET cost; another way to look at it is that it can offset your raw materials or supply costs partially or completely.
If you’d like any help computing this credit, or if you have questions about its applicability, why not reach out to FIVE x 5 Consulting for a free introductory call? We look forward to chatting with you on this topic, or any other compliance/regulatory needs you may have!
