Excise tax on wine

The nominal excise tax on wine stands at $1.90 per gallon in 2025, unchanged from 2017 when the rate first reached this level. The federal base rate has remained at $1.07 per wine gallon since the Tax Cuts and Jobs Act of 2017 introduced small producer tax credits, reducing the effective rate for qualifying producers while maintaining the statutory rate for larger volumes. State-level wine taxes have shown minimal movement in recent years, with the aggregate contribution remaining stable at approximately $0.83 per gallon. Most states have refrained from implementing significant rate increases, resulting in continued erosion of real tax values as inflation outpaces nominal adjustments.

The nominal excise tax on wine has demonstrated extended stability over the past eight years, maintaining a constant rate of $1.90 per gallon since 2017. Between 2004 and 2016, the rate grew modestly from $1.81 to $1.88 per gallon, reflecting incremental state-level adjustments rather than federal policy changes. The federal statutory rate for wine with 16% or less alcohol has remained frozen at its current level since the 1991 Omnibus Budget Reconciliation Act, representing over three decades without adjustment to the base rate. The 2017 increase to $1.90 per gallon likely reflects state-level rate changes implemented during that period, as several jurisdictions adjusted their wine taxes to address revenue needs.??

The limited growth in nominal terms during the five-year period from 2020 to 2025 reflects legislative inaction at both federal and state levels. The compound annual growth rate of zero percent during this period indicates complete stagnation in nominal terms, with no states implementing material rate increases that would affect the national aggregate. This pattern contrasts sharply with the 1933-1970 period when wine excise taxes increased modestly in inflation-adjusted terms, but since 1970 the real value of wine excise taxes has declined by 71% compared to inception rates. The absence of inflation indexing mechanisms means that while nominal rates remain constant, the purchasing power of collected revenues continues to diminish.