In this article, we are going to discuss the 5 states with the highest alcohol and beer tax. If you want to check out our detailed analysis of the importance of the U.S. alcohol industry, the impact of Covid-19 on alcohol consumption in America, the effect of taxes on alcohol abuse, and the call for lower tax rates for canned cocktails, head to 20 States with the Highest Alcohol and Beer Tax.
5. North Carolina
Excise Tax Rate on Distilled Spirits: $16.4 per gallon
Excise Tax Rate on Beer: $0.62 per gallon
Being one of the 17 control states, in North Carolina, the sale of liquor is controlled by the government, including taxes, fees, markup pricing, and the profit derived from liquor sales. Liquor is only sold at the state-run ABC stores, while beer and wine are also available at grocery stores and convenience stores. In fiscal year 2022, total revenue from spirituous liquor sales at the state’s ABC stores was $1.72 billion, while the total revenue for fortified wine was $2.2 million.
Excessive drinking cost North Carolinians nearly $10 billion in 2017, according to a study at the UNC Gillings School of Global Public Health. This is a 38% increase over excessive drinking costs in 2010.
4. Alabama
Excise Tax Rate on Distilled Spirits: $21.69 per gallon
Excise Tax Rate on Beer: $0.53 per gallon
Alabama is one of the many states with strict laws related to virtually all aspects of alcohol. That includes manufacturing, distributing, selling, and even consuming. In Alabama, just 16% of adults reported excessive drinking, which is less than the national average of 19%.
Alabama collected more than $272 million in taxes from alcohol sales in 2021, or roughly $54 per person. The state’s tax revenue from alcohol is utilized to fund various public services, including healthcare programs, education, and substance abuse prevention initiatives.
3. Virginia
Excise Tax Rate on Distilled Spirits: $22.06 per gallon
Excise Tax Rate on Beer: $0.26 per gallon
Because Virginia is a ‘control state’ (meaning the state government controls all liquor sales via its ABC stores), the state’s effective tax rate on booze not only includes excise taxes, but also a state-imposed markup on the retail price. This also limits alcohol outlet density, which has been proven to keep excessive drinking in control.
In 2022, Virginia ABC reached gross revenues of $1.4 billion and contributed $622.8 million to the Commonwealth for designated state programs and services.
2. Oregon
Excise Tax Rate on Distilled Spirits: $22.86 per gallon
Excise Tax Rate on Beer: $0.08 per gallon
Due to the extremely low state taxes on beer and wine, Oregon is a drinker’s paradise. The state boasts more craft distilleries than Kentucky and is second only to California in the number of wineries.
In June, Oregon Governor Tina Kotek asked the Oregon Liquor and Cannabis Commission to suspend consideration of a 50-cent surcharge on liquor sales. The governor’s decision means that, at least for the foreseeable future, Oregon is not increasing the price of liquor. A separate proposal to raise taxes on beer and wine never made it off the ground in the legislative session.
1. Washington
Excise Tax Rate on Distilled Spirits: $36.55 per gallon
Excise Tax Rate on Beer: $0.26 per gallon
Washington has the highest alcohol tax rate on distilled spirits in America. Such a high levy helps keep excessive drinking in control and brings in revenue for various public services and initiatives. However, critics argue that such high taxes may lead to increased cross-border shopping and the resultant negative effects on local businesses.
Washington has always had high liquor taxes, but when the Evergreen State privatized liquor in 2012, the initiative was designed to make sure the state didn’t lose any money.
Due to its high tax rates, Washington is the state with the Highest Alcohol Prices in America.
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