Rep. Tiburcio’s bill would let small breweries sell malt beverage tax credits to raise cash, supporters say

Representative Tiburcio introduced House Bill 2340 at a public hearing held at Sherman Street Beer Company in Allentown, saying the bill would allow breweries that incur capital expenditures to carry forward malt beverage tax credits for five years (up from three) and to sell or transfer those credits to other Pennsylvania breweries, providing struggling small operations with an immediate cash infusion.

"That's why I'm introducing House Bill 2340, which will allow credits to be carried forward for five years or three," Tiburcio said, identifying the change as a way to help small businesses that invest heavily to open or expand. Committee members noted the program has an annual allocation of $5 million and that the bill would not increase that amount.

Hannah Isen, executive director of the Brewers of Pennsylvania, told the panel the credit—created in 2016—initially helped the industry grow but now often leaves new or small breweries unable to realize most of the value because their malt beverage excise tax liabilities are small. "For example, a 1,000-barrel brewery would have a total excise liability of $2,480," Isen said, pointing to a mismatch between typical liabilities and the $200,000 per-award cap.

Patrick McDonald, a CPA who works with breweries, described how the combination of small excise liabilities, three-year carryforwards and practical business constraints (leases, loan payments and thin payroll margins) leaves many credits unrealized. "Making these credits sellable between the breweries would be a game changer for the industry," McDonald said, adding that his clients on average realize about 15% of awarded credit under the current rules and that the application itself remains dated (requiring documents on a thumb drive).

Witnesses and local owners gave concrete examples of lost value. Jim Yergi described more than $110,000 in equipment credits for his Emmaus brewery and said, "Without changes to the program, we're going to forfeit 98% of that credit." Larry Winans of Jackass Brewing Company said his firm received the full award but estimated it would take nearly 300 years for his operation to realize the full value at current excise rates.

Committee members asked how a secondary market might work and whether larger Pennsylvania brewers could absorb purchased credits; witnesses said limiting buyers to brewers in-state would direct funds back into the industry while preserving some tax revenue. Members also flagged administrative hurdles: McDonald said applications are due around March 31 or April 1 and that applicants do not hear back until July, and he criticized the requirement to submit supporting documents on a thumb drive rather than via an online portal.

Representative Cepeda Freitas said the filing process was a "red flag" and urged a discussion about modernizing and streamlining the program to make it accessible to smaller operators.

The hearing included repeated assurances that the proposal would not increase the program's $5 million annual allocation but would make existing funds easier for small brewers to realize. The committee chair said members hope to move the bill out of committee later in the month and to seek agreement with the Senate during upcoming budget negotiations. The hearing concluded without a committee vote; the panel adjourned after thanking the host, Beau Baden of Sherman Street Beer Company.