One tax ranking for Montana puts it among the lowest in the nation when it comes to taxing beer (off-premise sales of 12 ounce containers). At 14 cents a bottle, Montana has the 39th lowest beer tax – in a tie with New York.
Tennessee imposes the highest tax at $1.29. Alaska comes in second highest with a tax of $1.07, according to the Tax Foundation.
Wyoming has the lowest tax on beer at 2 cents. Wisconsin and Missouri tie for the second to last lowest tax of 6 cents.
The US first began taxing alcohol to help finance the Civil War.
The Tax Foundation reports that taxes on alcohol can represent some 30 to 40 percent of federal collections. “Without the federal income tax (adopted in 1913) as an alternative source of revenue, Prohibition would have been prohibitively expensive for the federal government.
“After the repeal of Prohibition, many states adopted ‘control’ regimes in which the state exercised a monopoly over some or all alcohol sales. Other states simply chose to regulate and tax alcohol, often heavily. Traces of the original purpose—both in Cleopatra’s Egypt and post-Prohibition America—of discouraging drunkenness remain evident in state alcohol laws, but by now, most excise taxes on beer are revenue measures first and foremost. As ‘sin taxes’ go, very little time is spent worrying about the ‘sin,’ while there is far greater interest in sin’s proceeds.”
State and local governments tax beer in a variety of ways, according to Tax Foundation. Some impose fixed per-volume taxes, while others adopt wholesale taxes, expressed as a percentage of the product’s wholesale price. Some states tax distributors (either through license fees or on their revenues), while still others levy case or bottle fees. Some states even have a special retail tax on alcohol above and beyond the general sales tax.
The Beer Institute, an industry trade group, argues that “taxes are the single most expensive ingredient in beer, costing more than labor and raw materials combined,” citing an analysis that finds that the sum of taxes levied on the production, distribution, and retailing of beer exceeds 40 percent of the retail price.