Is your business making the most of tax benefits this year? As annual tax deadlines approach, consider the following credits and deductions available to breweries and distilleries in New York State.

1. Section 179 and Bonus Depreciation

 Section 179 allows business owners to deduct the full cost of tangible property placed into service during the tax year. Eligible property includes machinery, equipment, certain vehicles, computers, software, and more. For a full list of eligible property, see IRS publication 946. For tax years beginning in 2024, the maximum expense deduction businesses can take is $1,220,000. This limit decreases when more than $3,050,000 worth of Section 179 property is placed into service during the tax year.

Bonus depreciation is another immediate expense deduction available to brewers and distillers. Bonus depreciation allows business owners to deduct a percentage of the cost of newly acquired property. The bonus depreciation rate for 2024 is 60 percent for certain qualified property. Note: Beginning in 2022, bonus depreciation percentages began decreasing as the incentive started phasing out. The rate will continue to go down by 20 percent each year until 2027 when the phase-out will be complete.

Combining Section 179 and bonus depreciation can result in significant tax savings for business owners. If you plan to utilize both benefits, keep in mind that Section 179 must be applied first.

2. Alcoholic Beverage Production Tax Credit

 Registered distributors who produce beer, cider, wine, or liquor in New York are eligible for the Alcoholic Beverage Production Tax Credit if, during the tax year, they produced a maximum of 60 million gallons of beer or cider; 20 million gallons of wine; or 800,000 gallons of liquor.

For the first 500,000 gallons produced in the state, the tax credit equals:

• 14 cents per gallon of beer or cider
• 30 cents per gallon of wine
• $2.54 per gallon of liquor with alcohol by volume (ABV) between 2% and 24%
• $6.44 per gallon of liquor with an ABV above 24%

For amounts in excess of 500,000 gallons, the credit equals 4.5 cents per gallon up to 15 million additional gallons of beer, cider, or wine and up to 300,000 additional gallons of liquor. During an audit, you may be required to prove entitlement to the tax credit by providing copies of various forms (click here for a list.)

Please note that this credit is taxable. For more information, check out our article on the taxability of the NYS Alcohol Production Tax Credit.

3. Tipped Employee Credits

FICA Tip Credit

If you employ food and beverage service workers who customarily earn tips and you pay Social Security and Medicare taxes on those tips, you may be eligible to credit a portion of what you pay against your business income taxes. Recordkeeping requirements apply.

New York Tip Credit

If you employ food and beverage service workers who earn at least $30 a month in tips, a portion of those tips may be used to satisfy your minimum wage obligation. When taking this credit, recordkeeping and reporting requirements apply. More information on the NYS Tip Credit can be found here.

Conclusion

Don’t miss out on opportunities to maximize your tax benefits this year. These credits and deductions can save you money on taxes, and capital which can then be used to reinvest in your business. For more information on tax benefits available to your business, contact our experts at RBT CPAs. Our firm is here to support your business’s accounting, advisory, tax, and audit needs. Give us a call today to find out how we can be Remarkably Better Together.

Especially when it comes to taxes, you should always take credit where credit is due!

Following are highlights of numerous tax credits that may be available to your business, related to employees, research and development, your product, whether your business is part of a farm operation, and more. Becoming familiar with what’s available can help you ensure you’re tracking and documenting the right information so you can take credit where credit is due.

Alcoholic Beverage Production Credit

Registered distributors who produce beer, cider, wine, or liquor in New York are eligible if during the tax year, they produce 60 million or fewer gallons of beer; 60 million or fewer gallons of cider; 20 million or fewer gallons of wine; or 800,000 or fewer gallons of liquor. Each year, the tax credit for the first 500,000 gallons produced in the state equals $.14/gallon of beer or cider; $.30/gallon of wine; $2.54/gallon of liquor with an ABV of 2% to 24%; or $6.44/gallon of liquor with an ABV over 24%. For amounts over 500,000 gallons, the credit equals $.045/gallon for up to 15 million gallons of beer, cider, and wine and up to 300,000 gallons of liquor. Recordkeeping and forms required to claim the credit are here.

Employing Employees in Certain Protected Classes In New York

You may receive tax credits when you employ a veteran, a person with disabilities, youth between the ages of 16 and 24, and people recovering from substance use disorder. Federal tax credits are also available when you hire individuals from certain targeted groups under the Work Opportunity Tax Credit.

Federal Fuel Tax Credit

Through 2024, farms and breweries may qualify if they use fuel for off-highway purposes, such as running equipment and machinery. The IRS has identified this as one of its “dirty dozen” or among the most abused tax breaks so extra care must be made when claiming the credit.

Federal R&D Tax Credit

Reduce your federal tax liability dollar for dollar to offset quarterly payroll taxes by up to $500,000 for qualifying research activities. For breweries and distilleries, the credit may be available for activities resulting in product changes; process changes to improve waste reduction and efficiencies; new sustainable practices; and more. Credits are based on money spent on employees’ time, contractor expenses, and supplies and equipment. See IRS Form 6765 for details.

FICA Tip Credit

If you have food and beverage service workers who customarily earn tips and you pay Social Security and Medicare taxes on those tips, you may be eligible to credit a portion of what you pay against your business income taxes. Recordkeeping requirements apply. A draft of IRS Form 8846 is also available, with additional information.

New York Tip Credit

If you employ food and beverage service workers who earn at least $30 a month in tips, a portion of those tips may be used to satisfy your minimum wage obligation. This applies to work hours producing tips or supporting tip-producing work that is not performed for more than 20% of an employee’s workweek. To take this credit, recordkeeping and reporting requirements apply.

If You Operate Your Brewery at a Farm

Farm Employer Overtime Credit

New for 2024, eligible farmers who pay a farm employee overtime, may be eligible for a tax credit.

Farm Workforce Retention Credit

If you are a farm employer or owner of a farm employer in New York and have an eligible farm employee employed for at least 500 hours, you may be eligible for an annual credit of $1,200.

Excelsior Job Program

If you have an agricultural operation in New York that is expanding and will result in at least five new jobs, you may be eligible for job tax credits, investment tax credits, R&D tax credits, property tax credits, and child care services tax credits. Click here for more information.

Investment Tax Credit

Eligible farms that place qualified property into service during a tax year may qualify to claim 20% of the cost. If you qualify for the investment tax credit and more than double your employee count as a result, you may also be eligible for the New York Employment Incentive Credit.

There are even credits if you purchase an automated external defibrillator, pay premiums for eligible long-term care insurance,  pay school taxes, rehabilitate a historic building, rehabilitate a barn built before 1946, sponsor an apprenticeship program, and more.

If you need help identifying potential tax credits that may be available to your brewery, distillery, and/or distribution business, you can count on RBT CPAs. We can also help you ensure your recordkeeping practices will enable you to take full advantage of what’s available.

RBT CPAs has been a leading provider of accounting, audit, advisory, and tax services to Hudson Valley businesses, non-profit organizations, municipalities, and individuals for the past 55 years. Give us a call so you can see how we can be  Remarkably Better Together.

RBT CPAs never offshores work outside of the U.S. so you always know who is handling your financial information.

As you go about your business, it also helps to stay apprised of what’s on the legal horizon so you can start thinking about what a new or updated law may mean to you and what you may need to do to ensure compliance.

Nutrition & Allergy Label Transparency

The U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB) is in the midst of exploring mandatory disclosure rules to include nutritional information, ingredients, alcohol content, and major allergens on all cans and bottles.

In February and March, the TTB held listening sessions and collected public comments from brewers, winemakers, distillers, drinkers, and the general public as it considers whether alcoholic drinks should be labeled with the same nutritional information as other foods and beverages. This includes calories, carbs, fat, protein, and more, along with allergen information.

Small breweries and wineries are arguing against the requirement due to the burden of having annual lab tests; potential delays in label approvals and bringing products to market; and related revenue implications. In lieu of printing, some are advocating to follow the European Union’s lead of using QR codes to link to nutritional information. Proposed rules are expected to be introduced this year and, if adopted, a multi-year implementation will likely ensue.

CHEERS

The Creating Hospitality Economic Enhancement for Restaurants and Servers (CHEERS) Act was introduced to help restaurants, bars, and other businesses operating draft beer systems. The Act provides incentives to expand tap lines and keg equipment in commercial establishments, and to do so with energy efficiency top of mind.

With the backing of numerous industry groups, the CHEERS Act passed the U.S. House of Representatives in March and is now moving to the U.S. Senate for consideration. If all goes well, tax incentives for qualifying investments in energy-efficient systems will be expanded to include keg, tap, and draft line property. This could translate into significant savings for business owners and a boost for the environment.

Bubble Tax Modernization Act

In mid-January, the Bubble Tax Modernization Act was introduced to Congress with the goal of amending a carbonization tax disparity for lower alcohol cider, mead, and wine made with fruit.

Thanks to the Craft Beverage Modernization and Tax Reform Act, low-ABV carbonated grape wines are taxed at $1.07 a gallon. There is no carbonization tax on fruited beers, seltzers, and ready-to-drink cocktails. However, low-ABV fruit wine, cider, and mead have been left out of carbonation and tax advantages. The Bubble Tax Modernization Act seeks to level the playing field.

Talent-Related

Since the start of the year, a number of people-related laws have taken effect, impacting employers across industries. Changes impact interviewing and hiring practices, overtime rules, minimum wage, independent contractor rules, paid breast milk expression breaks and prenatal leave, pregnant workers fairness, and non-compete agreements. If you need assistance developing or executing an implementation plan to promote compliance, Visions Human Resource Services – an RBT CPAs affiliate – is available to help. Contact a client manager at info@VisionsHR.com or call 845-567-3978 for more information.

And, as always, if your organization needs any accounting, audit, tax, or advisory services, you can continue to count on RBT CPAs to do the job professionally, ethically, on time and within budget. Get in touch so we can show you how we can be Remarkably Better Together.

Please Note! Visions Human Resource Services – a wholly owned subsidiary of RBT CPAs, LLP – and RBT CPAs, LLP are not law firms. Nothing in this article should be construed as legal advice. Should you need legal advice, contact your legal counsel. 

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data. 

A tax credit reduces the amount of taxes you owe, dollar for dollar. Tax credits are available at the federal and state levels. Here are some highlights about of two tax credits every brewer/distiller/distributor business should explore.

New York’s Alcoholic Beverage Production Credit

Starting tax years beginning on or after January 1, 2023, distributors may be eligible for a higher Alcoholic Beverage Production Credit than what was available in the past. Registered distributors who produced beer, cider, wine, or liquor in New York are eligible if during the tax year 60 million or fewer gallons of beer; 60 million or fewer gallons of cider; 20 million or fewer gallons of wine; and 800,000 or fewer gallons of liquor were produced.

For the first 500,000 gallons produced in the state, the tax credit equals:

• $.14/gallon of beer or cider
• $.30/gallon of wine
• $2.54/gallon of liquor with alcohol by volume (ABV) not less than 2% and not more than 24%
• $6.44/gallon of liquor with an ABV above 24%

For amounts in excess of 500,000 gallons, the credit equals $.045/gallon up to 15 million additional gallons of beer, cider or wine and up to 300,000 additional gallons of liquor. During an audit you may be required to prove entitlement to the tax credit by providing copies of various forms (click here for a list.) For more information about the credit, click here.

Federal R&D Tax Credit

The Federal R&D tax credit reduces federal tax liability dollar for dollar; unused amounts can be carried forward for 20 years. It can apply to a range of qualifying research activities (QRAs) in all size businesses and across numerous industries. Qualified small businesses can use the R&D credit to offset quarterly payroll taxes up to $500,000.

When it comes to breweries and distilleries, they may be eligible for R&D tax credits for activities relating to brewing and distillation processes that result in product changes; updating fermentation processes or changing ingredients to develop new flavors; streamlining processes for product improvements, waste reduction and efficiencies; new sustainable and eco-friendly practices; and more. Credits are based on money spent on employees’ time; contractor expenses; related supplies and equipment; and more.

For more information from the U.S. Chamber of Commerce, click here. (Kubiak, Lauren. “How to Qualify for and Claim the R&D Tax Credit.” November 13, 2023. www.uschamber.com.)

Please note: the preceding information provides highlights related to tax credits; there’s a lot more involved impacting eligibility, documentation, and such. RBT CPAs accounting, audit, tax, and business advisory professionals can help you make the most of the tax credits available to your business. To learn more, give us a call.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Earlier this year, we reported on Governor Hochul’s Commission to Study Reform of the Alcoholic Beverage Control (ABC Law) in an attempt to modernize the state’s liquor laws (some of which purportedly date back to the end of the Prohibition Era in 1933). In May of this year, the commission released a 192-page report containing proposed changes, but the state’s legislative session ended without any updates. That changed in mid-October when Governor Hochul signed a handful of bills.

On October 14, Governor Hochul amended six pieces of legislation that took effect immediately, including:

• Legislation S.2854/A.7305 Expands Hours of Operation for Liquor and Wine Stores on Sundays Up until the change, liquor stores were limited to open at 12 p.m. Starting October 16^th, sales are allowed from 10 a.m. to 10 p.m., leveling the playing field with bars and restaurants. (This is one of the 18 changes recommended by Governor Hochul’s Commission in May.)
• Legislation S.5731/A.6941 Allows for the Retail Sale of Beer on Sundays Now, beer, mead, braggot, and cider may be sold any day of the week, including Sunday. (Previously, sales for off-premises consumption were not allowed between 3 a.m. and 8 a.m. on Sundays.)
• Legislation S.6443/A.6135 Lengthens the Duration of a Brewer’s License Previously, brewers were required to renew their license once a year. Now, that law has been updated to require renewal once every three years, reducing administrative burdens on brewers, while promoting equity between brewers and other alcohol producers that were only required to renew once every three years.
• Legislation S.3364A/A.2902 Authorizes the Use of a Pressurized Mixing and Dispensing System So businesses can prepare and keep drinks that contain alcohol in pressurized dispensing machines.
• Legislation S.3567A/A.6050A Permits the Sale or Promotional Gifting of Certain Complementary Products for Wine and Spirits As a result, retail stores can sell complementary gift and promotional items related to wine and spirit sales.
• Legislation S.6993A/A.7688 Relates to Licensing Restrictions for On-Premises Alcohol Consumption for Manufacturers and Wholesalers of Alcoholic Beverages at Specific Locations This expands the list of premises exempt from laws restricting manufacturers/wholesalers and retailers from having a shared interest in a liquor license.

(It is important to note that some counties may have stricter rules. It is always in your best interest to consult legal counsel with questions.)

In the press release announcing the legislative changes, Governor Hochul said, “Across New York, breweries, distilleries, and other alcoholic beverage businesses are creating jobs and expanding economic opportunity. I’m proud to sign this legislation that will modernize the laws governing the sales of alcoholic beverages in New York.”

We hope your business benefits from these changes and that there will be more to come. Stay tuned! In the meantime, please remember RBT CPAs is here to help with your accounting, tax, audit, or business advisory needs. Interested in learning more? Give us a call today.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

There is nothing better on a hot summer day than reaching for an ice-cold brew. With growing frequency, the craft brew people reach for is missing one key ingredient – ethanol a.k.a. alcohol. The non-alcoholic craft brew market has been growing at warp speed, even as beer sales decline. What is propelling this expansion and what comes next? Let’s take a look.

Non-alcoholic brews have been around for decades but never picked up much steam. There were stigmas attached, identifying its drinkers as those with or recovering from alcohol issues. Perhaps a bigger problem was the fact that they just didn’t taste good. Over the last five years, however, evolving societal norms and craft brewers have changed all of that.

Now, the “sober curious” have embarked on finding great-tasting adult beverages without the alcohol. They want the social side that comes with imbibing, minus the hangover (and potential legal risks).

Younger generations – Millennials and GEN Zers – have turned values on their head with things like not living to work but instead working to live. They also don’t readily associate drinking with being cool.

Those who make fitness and health cornerstones of their lives appear to feel better about imbibing without the buzz, even touting non-alcoholic brews’ potential restorative health powers. Some assert it’s the same as or better than sports drinks following a workout, with research pointing to benefits like less inflammation, improved immunity, and good hydration. (Reynolds, Gretchen. “Why non-alcoholic beer beats regular beer after exercise.” January 25, 2023. The Washington Post.) For fitness enthusiasts, there are other perks such as no hangover, fewer calories, natural ingredients, and, with growing frequency, great taste.

A paper published in the National Library of Medicine last year, entitled: “Features of Non-Alcoholic Beer on Cardiovascular Biomarkers. Can It Be a Substitute for Conventional Beer?” reviews several studies showing the potential benefits of drinking non-alcoholic brews, including decreased cardiovascular risks and mortality; positive antioxidant effects; additional benefits over water for those with non-alcohol related cirrhosis of the liver; and ischemic heart disease benefits. It does point out that current knowledge is limited, but simultaneously opens the door to continued exploration of the link between health and non-alcoholic brews. (Sancen, Marco; Leniz, Asier; Macarulla, Maria Teresa; Milton-Laskibar, Inaki; Portillo, Maria; and Estruch, Ramon. December 30, 2022)

Just as craft brewing created its own market and following, inviting fans to enjoy a myriad of recipes, processes, and tastes, the non-alcoholic craft brew market appears to be on the same track. In addition to breweries and retail stores, there are a growing number of non-alcoholic bars and restaurants featuring non-alcoholic menu selections. Recently, the first major U.S. airline signed on to offer non-alcoholic brews.

Actual financial performance shows this market has serious uphill momentum. The Brewers Association’s publication, The New Brewer’s January-February issue reports: “Craft non-alcohol beer was scarcely a category five years ago. Now it’s a hot commodity, propelling the once-moribund NA beer segment to grow 31.7%.”

CNBC reports, “With more consumers choosing non-alcoholic beers in a move towards healthier drinking alternatives and safer drinking habits, the global non-alcoholic beer market has grown to $22 billion in 2022, according to GMI Insights, which projects that could reach $40 billion by 2032. According to Nielsen, non-alcoholic beer grew 20% in the U.S. in retail dollars in the past year.”

Beverage Industry’s 2023 State of the Beverage Industry says, “Although a smaller segment in the overall U.S. beer category, non-alcohol beer increased 22.8% for the 52 weeks ending May 21 in total U.S. multi-outlets for a total of $308.7 million. Case sales also increased double digits with an 11.6% increase.” While inflationary pressures are expected to slow growth in the coming years, the market still has plenty of opportunity ahead. (Jacobsen, Jessica. “2023 State of the Beverage Industry.” July 6, 2023. Bevindustry.com.)

No doubt, we are still in the early chapters of this market’s story. Whether you’re considering the role your business will play in non-alcoholic brews or the impact it will have on your story, please know RBT CPAs are here to support your accounting, tax, audit, and business advisory needs. To learn more, give us a call today.

RBT CPAs do not outsource work to any other country. All of our work is prepared in the U.S.A.

Along with a new New York State budget for fiscal year 2024 comes an expansion of certain Alcoholic Beverage Production Credits (ABPC), which can be good news for eligible distillers, wineries, and farm-based beverage producers.

Each year, New York State alcohol manufacturers pay an excise tax to the state. This can be offset by filing for an ABPC. Until recently, the credit was the same regardless of whether you manufactured beer, cider, wine, or liquor. It equaled $.14/gallon for each of the first 500,000 gallons plus $.045/gallon for each gallon above 500,000 (up to a maximum of an additional 18 million gallons for beer, cider, or wine and an additional 300,000 gallons of liquor).

For most beers and ciders, the credit equaled the excise tax. For wine and liquor, however, the credit was lower than the excise tax.

Effective immediately for tax years on or after January 1, 2023, under New York Tax Law Section 37, if the following is produced in New York, the ABPC equals:

• Beer: $.14/gallon (no change).
• Certain cider products: $.14/gallon (no change). Applies to cider, artificially carbonated sparkling cider, and natural sparkling cider containing more than 3.2% alcohol.
• Certain wine products: $.30/gallon. Applies to still wine, artificially carbonated sparking wine, and natural sparking wine.
• Certain liquors containing 2% to 24% alcohol: $2.54/gallon.
• Certain liquors containing less than 2% alcohol: No credit.
• All other liquors: $6.44/gallon.

You will still need to pay the excise tax and then file for the ABPC to receive what equates to a rebate. Corporations need to file Form CT-636; all others need to file Form IT-636.

Your business is eligible for the ABPC if you are a registered distributor under Article 18 of the Tax Law and during the tax year produced 60 million or fewer gallons of beer or cider; 20 million or fewer gallons of wine; and 800,000 or fewer gallons of liquor. Certain recordkeeping requirements apply. For details, visit the New York State Department of Taxation & Finance website.

If you have any questions about how the ABPC change may impact your accounting and taxes, please give us a call. We’re RBT CPAs, a leading accounting firm in the Hudson Valley and beyond for over 50 years, and we believe we succeed when we help you succeed. Let’s start today!