Hard fought Tax Changes for Hard Cider

The hard cider business is booming in North Carolina. We happen to live in an area that is famous for Apples. If you drive from Hendersonville to  Chimney rock you will see acres of beautiful apple trees. The climate is perfect for apples and brewing great cider.  It may be hard to believe... but cider was more popular than beer in the pre-prohibition days. In colonial times it was difficult to cultivate the barley and other grains to make beer. So early settlers planted apple trees to make cider. Now we know why Johnny Appleseed walked around with a pot on his head.

Hard cider is making a comeback. It is now a 600 million dollar a year industry nationally. However, cider makers have a had a hard time selling cider because of outdated excise taxes that classified the beverage in the same category as champagne. The cider industry needed legislative changes to make it easier to sell their product. This week the Senate passed the cider act:

The USACM endorses the Cider Investment and Development through Excise Tax Reduction (CIDER) Act (H.R. 600) introduced by Representatives Earl Blumenauer and Chris Collins; and the CIDER Act (S. 1459), sponsored by Senator Charles Schumer.

Under current federal tax law, the definition of hard cider only allows for up to 7% alcohol by volume before it is taxed at the more expensive rate for wine, and only a certain level of carbonation before it is subject to the extremely expensive champagne tax ($3.30 or $3.40/gallon).

Because many cider producers are small, craft operators, who rely on natural raw materials, they often have little ability to predict and control the precise alcohol content and carbonation level of their product. Meanwhile, cider consumers expect a somewhat high level of carbonation equivalent to that of most beer.

These bills would amend the section of the Internal Revenue Code (26 USC Section 5041) to allow cider makers to produce cider using the natural products available without the possibility of facing increased tax liability. Specifically, the legislation would (1) increase the carbonation level for hard cider, thereby meeting customer expectations, (2) include pears in the definition of "hard cider," and (3) align the alcohol-content standard for hard cider with the natural sugar content of apples.   American Association of Cider Makers

This is wonderful news for local cider makers increasing the permissible alcohol and carbonation levels and reducing the excise tax on some products that exceed those levels. This is good news for Asheville and Western North Carolina.  So celebrate with a local cider.