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Committee approves tax on low-alcohol spirits with amendments amid industry opposition
Summary
SB641 would create a new tax category for low-alcohol-by-volume spirits at $0.85 per wine gallon. The measure passed committee with reservations recorded and industry groups warned of state revenue loss.
SB641, a measure to define “low alcohol by volume” spirits beverages and to establish a tax at a rate of 85 cents per wine gallon on those products, was considered by the Senate Committee on Commerce and Consumer Protection on Feb. 10, 2025.
Mihoko Ito of the Wine Institute testified in opposition, warning that creating a new tax category for a fast-growing segment of the industry would constitute a tax break for that category and lead to state revenue loss, citing experiences from other states. The Tax Foundation and Department of Taxation provided written comments. Napali Brewing Company and others submitted written support for certain parts of the proposal.
Committee discussion resulted in passage with amendments; the effective date was defected to July 1, 2050 to allow further drafting and review. The vice chair recorded a vote with reservations. Stakeholders asked for follow-up information about fiscal estimates and the revenue impact; the Wine Institute offered to provide supporting studies the committee could review.
No final revenue estimate was adopted at the hearing; the committee directed staff to gather additional fiscal data and to refine tax classification language before the bill proceeds further.
