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Federal taxes


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Disclaimer: Yes I did search for taxes on the forms to see if anyone posted this before.

I am kind of confused and ifs not find and definitive information about HOW federal taxes are implemented. I am making a vodka to be bottled in 750ml bottles. According to the below link, if I am reading it right, there is a tax for distilling a gallon (13.50 at only 50%) and another per packaged bottle at 40% (2.14 at 40%) so added up I take this to equal..

2.14 +


Equals near 4 dollars to the fed. Am I reading this correctly? Or am I just flunking on my math somehow? Or does just the 750ml charge apply?


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The only federal excise tax on distilled spirits can be calculated at $13.50 per Proof Gallon. Because a 750ML of 40% ABV contains 0.158 Proof Gallons, the federal excise tax equals $2.14.

Where are you finding the extra 40% tax in the page you linked? That amount however is right around what you will "pay" on a state level, not in tax but in the cut to your broker-distributor for doing what they do. The states will levy an additional excise tax as well, and each state's rate is different.

best of luck,


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New York state levies a 1.70$ excise tax per 1L bottle sold but is adjusted for 750ML so I assume I will be paying 1.28 per bottle according to the form. The .66$ one in California seems a lot nicer then here! The only bonus New York has is the steep discounts and benefits of getting the newly created micro distillery license (Class a-1 I believe) which saves a lot compared to the old 50,000$ one.

The federal tax isn't too crippling, neither is the state. However taxes can add up very quickly. A second question that just went through my mind was do distillers pay sales tax when they wholesale it to a retail establishment? Or is the retail establishment required to pay that tax? I used to manage a bar, and when we bought a shipment of liquor neither us nor the wholesaler seemed to pay sales tax. The sales tax was factored into our income, and the local had like a 7% sales tax as well. I am guessing that the state, federal and local taxes get placed on our overall income?

Another note that I want to add is that I plan on doing the distribution myself. I have a good backing for doing so, and a friend who is on board with me is helping me handle those logistics. Where I live in New York the population is very dense. My small county alone which you could drive across in a matter of 30 minutes has more than 600k people.

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