Excise tax on distilled spirits

The nominal excise tax on distilled spirits is expected to remain at $17.96 per gallon in 2025, unchanged from the previous year. The federal rate has held steady at $13.50 per proof gallon since 1991, when the Omnibus Budget Reconciliation Act increased the rate by $1.00. State-level taxes contribute the remainder, with the average state nominal excise tax remaining stable at approximately $4.46 per gallon through 2025. Minimal adjustments at the state level have not materially altered the aggregate national rate in recent years.

The nominal excise tax on distilled spirits has demonstrated remarkable stability over the past five years, with the rate hovering between $17.96 and $17.97 per gallon. The federal component has remained frozen at $13.50 per proof gallon for over three decades, representing one of the longest periods without adjustment in the history of federal alcohol taxation. Although the Tax Cuts and Jobs Act of 2017 introduced reduced rates for smaller producers, the statutory maximum rate applicable to larger volumes has not changed.

State-level policy changes have been minimal during this period, with few jurisdictions implementing significant rate increases. Regional disparities persist, as states like Washington and Alaska maintain substantially higher rates than jurisdictions in the Southeast or states like Maryland and Washington D.C.. The absence of inflation indexing means that while nominal rates remain constant, the real value of these taxes continues to erode. Federal alcohol excise taxes have increased only three times since 1951, with the most recent adjustment occurring in 1991.?

The limited growth in nominal terms during the five-year period reflects legislative inertia rather than deliberate policy design. Between 2020 and 2025, the nominal rate increased from $17.96 to $17.96 per gallon, representing a compound annual growth rate of effectively zero percent. Small incremental changes visible in the data series, such as the increase from $17.37 to $17.53 between 2008 and 2009, likely reflect state-level adjustments or changes in methodology for calculating the aggregate rate.