Business Environment Profiles - United States
Published: 25 July 2025
Excise tax on wine
2 $
-4.0 %
The excise tax on wine represents the sum of the average federal and median state tax levied on wine. State tax rates per gallon of alcohol in New Hampshire, Pennsylvania, Utah and Wyoming are unavailable because these states' governments collect excise tax revenue directly through various taxes, fees, price mark-ups and net liquor profits at state-operated outlets. Total tax revenue in these states cannot be simplified into a single figure. Estimated excise taxes on wine are adjusted for inflation, with the base year 2023. Data is sourced from the Wine Institute, Alcohol and Tobacco Tax and Trade Bureau, the Tax Policy Center and the Federation of Tax Administrators.
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In 2025, the aggregate excise tax on wine, including both federal and state components, is estimated at $1.93 per gallon, reflecting a continued downward trend. This decrease is largely due to the aftereffects of the Tax Cuts and Jobs Act (TCJA) and the permanence of its provisions under the Craft Beverage Modernization Act. Since 2018, excise taxes on wine have remained unchanged at the federal level, with occasional state adjustments. Meanwhile, the retail price of wine has increased with broader inflationary pressures, reducing the real value of excise taxes, which now make up a smaller share of the retail price.
From 2020 to 2025, the average aggregate excise tax rate for wine declined at an annualized rate of 4.0%, decreasing from $2.28 per gallon in 2021 to $1.93 in 2025. This period saw policy stability following the implementation of lower rates at the federal level, as formalized by the TTB in December 2020. Most states maintained rates near the median, with some regional variations: Western states often levied higher taxes, while Midwestern states imposed lower rates. For instance, Alaska had the highest rate at $2.50 per gallon, while Texas and California applied the lowest at $0.20 per gallon. Inflation, a key macroeconomic trend, increased the nominal price of wine, further reducing excise taxes' real impact on consumers. Consequently, despite stable or slightly adjusting state rates, the aggregate tax burden declined in real terms.
The TCJA, passed in 2017, had a lasting impact by reducing federal nominal excise tax rates by 37.7% to $1.32 per gallon and introducing a formula based on production volume and wine characteristics. These changes influenced excise tax performance by preventing potential increases and maintaining a low relative tax burden. Broader factors, such as rising inflation and a stable federal tax environment, were crucial in determining the effective incidence of the excise tax on wine.
From 2020 to 2025, the excise tax on wine consistently declined, driven by federal legislative changes and state policy inertia. With inflation contributing to rising wine prices, the importance of excise taxes as part of the retail price diminished, accentuating the downward trend in real terms.
In 2026, the aggregate excise tax on wine is projected to fall to $1.87 per gallon, continuing it...
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