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These 6 States Have the Lowest Beer Taxes

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Everywhere you turn, it seems like there's a new tax you have to pay. Recent news that the federal government could allow states to start taxing Internet transactions has raised an uproar among shoppers who for years have been able to use online retailers to avoid sales tax.

As we examined yesterday, beer-drinkers get hit hard in many states that impose high excise taxes on the beverage. At the state and local level, although state income taxes, property taxes, and general sales taxes provide a lot of tax revenue, most states also use other taxes to find more money for government programs. But some states don't make drinking beer nearly as expensive. Turning once more to the Tax Foundation for data at the state level, let's take a look at the six states that charge the least in excise taxes per gallon on beer sales, along with figures from the Beer Institute showing where they rank in terms of beer consumption.

6. Oregon
Oregon weighs in with the sixth lowest tax rate in the nation, as it has excise taxes that round to just $0.08 per gallon. Even with beer consumption of 30.2 gallons per person putting the state right around the middle of the pack, the microbrewery industry is especially important in the Pacific Northwest, and Oregon's low excise taxes help provide support for small microbrewers seeking to sell their products in-state. Moreover, with very high income-tax rates, Oregon generally has other sources of tax revenue to rely on.

4 (tie). Colorado
Colorado's beer excise taxes also come in at $0.08 per gallon, perhaps reflecting the importance of the Coors brand of Molson Coors (NYSE: TAP  ) to the state's overall economy. That's a trend you'll see elsewhere on the list, as well as with Massachusetts, which just barely missed the list at No. 7 and provides the headquarters for craft-brew specialist Boston Beer (NYSE: SAM  ) . Per-capita beer consumption of 30.9 gallons per year leaves Colorado at No. 20 nationwide.

4 (tie). Pennsylvania
Pennsylvania's $0.08 beer excise tax matches Colorado's perfectly, leaving the two states in a tie. But Pennsylvania's per-capita consumption of 29.1 gallons per year doesn't even crack the top half of all states. Ample tax revenue from income and general sales taxes appears to be sufficient to allow the state to let beer-drinkers off the hook for a big tax bill.

3. Wisconsin
Wisconsin also has a major brewing presence, as the traditional location of SABMiller's Miller Brewing. With beer excise taxes of $0.06 per gallon, the state's drinkers are highly appreciative, as Wisconsin ranks sixth in the country for per-capita beer consumption at 36.2 gallons. High income and property taxes also give the state government alternative revenue.

2. Missouri
The traditional home of Anheuser-Busch InBev (NYSE: BUD  ) , Missouri charges just $0.06 per gallon in beer excise taxes. Again, the key presence of a major brewer is probably behind the state's decision to minimize taxes on beer. Somewhat surprisingly, beer consumption isn't all that high, with the 31.1 gallons per year of beer that the average person drinks barely enough to put Missouri into the top 20.

1. Wyoming
Why Wyoming would have the lowest beer taxes in the nation isn't immediately obvious, but at $0.02 per gallon, no other state even comes close. What's particularly surprising is that with no state income tax, Wyoming might typically try to use beer taxes as a way to collect revenue. Beer consumption is fairly high, with 32.4 gallons per person annually putting the state almost into the top third.

Protecting their own
As many of these figures show, states often take steps to protect important industries within their borders, and so many of the states with the lowest beer taxes have major beer companies that do business there. The net result, though, is a big benefit for beer-drinkers who live or purchase beer in those states.

Massachusetts just barely missed this list, but Boston Beer's Samuel Adams brand helped to redefine beer and kick off the craft beer revolution throughout the United States. Success breeds competition, though, and while just a few years ago Boston Beer had claim over most of the craft beer shelf, today the field is crowded. Can Boston Beer rise above the rest, or will it be squeezed between small local breweries on one side and global beer giants on the other? To help you decide, we've compiled a premium research report filled with everything you need to know about Boston Beer's risks and opportunities. Just click here now to find out whether Boston Beer is a buy today.

Massachusetts just barely missed this list, but Boston Beer's Samuel Adams brand helped to redefine beer and kick off the craft beer revolution throughout the United States. Success breeds competition, though, and while just a few years ago Boston Beer had claim over most of the craft beer shelf, today the field is crowded. Can Boston Beer rise above the rest, or will it be squeezed between small local breweries on one side and global beer giants on the other? To help you decide, we've compiled a premium research report filled with everything you need to know about Boston Beer's risks and opportunities. Just click here now to find out whether Boston Beer is a buy today.


Read/Post Comments (6) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 12, 2013, at 11:13 AM, Yonnakaye wrote:

    What is the rate of alcoholism in these states? What is the rate of deaths caused by alcohol in each of these states? What is the divorce rate caused by alcohol in these states? What is the rate of state assistance caused by alcoholism due to medical problems in these states? What is the rate of fetal alcohol syndrome in these states? I could go on and on, I hope my point is taken.

  • Report this Comment On May 12, 2013, at 11:18 AM, inboardshooter wrote:

    Personal choice man. That's what makes this country great. Our choices, our consequences.

  • Report this Comment On May 12, 2013, at 2:42 PM, BeerHere2010 wrote:

    Correction: New York has the lowest #beer excise tax in the US! When .gov Cuomo signed legislation last year 'zeroing out' the excise tax for the first 500K gallons (~16K Bbls), New York bypassed Wyoming for #1 on lowest OR #50 on highest, either/or.

    I'm going to lobby for an asterisk w/ my go-2-guy @ the Tax Foundation.

    If you're a looking to startup a #craftbeer brewing operation in the US, look N NY's #Adirondacks for TRILLIONS gallons/year of pure soft #water just 'oozing' out of the five major watersheds on America's Most Accessible Wilderness. W/ ~ 100M folks w/i a day's drive, plenty of pure water and the LOWEST #beer excise tax in the US...

    New York is Open for (#Beer) Business

    #ADKBREWCO

  • Report this Comment On May 12, 2013, at 2:45 PM, MOhuntered wrote:

    I knew as soon as I saw the article's title that Missouri would be one to the six states. Why, because of the number of beer cans laying along the highways everywhere that one goes in Missouri, that's why. I can't take a walk in the Mark Twain Nat'l Forest without picking up someone's empty beer and soda cans that have been left by, as much as I hate to admit it, fellow hunters and ATV riders!! Never mind that it is illegal to have a firearm in one hand and a beer in the other. There ought to be a deposit fee for each and every aluminum can of like 10 cents. That would be cause for people to bring them in to be recycled. Plus it would make our state more respectable to the viewer's eye.

  • Report this Comment On May 12, 2013, at 3:34 PM, BeerHere2010 wrote:

    btw, Yonnakaye? Your point IS 'taken'. You're one of the rightously indignant that relies on innuendo and specious claims and hopes folks are too lazy to google the numbers.

    Here's the #'s:

    http://www.nd.gov/dhs/info/pubs/north-dakota-integration-stu...

    All those questions/stats are readily available AND there is NO correlation between lower excise tax rates and HIGHER alcoholism etc. Fact is some of the states w/ the WORST #'s have the highest excise taxes. (eg AK)

    If you want to 'crusade' against, try legal script abuse, where deaths have TRIPLED ( to about 40 day) over the last 10 years while alcohol use per capita has remained level for over two decades.

    Facts matter. #justsayin

    http://www.medicalnewstoday.com/articles/236942.php

  • Report this Comment On May 13, 2013, at 9:31 AM, taug99 wrote:

    can you say,

    BEER LOBBY ?

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Dan Caplinger
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Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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