This bill creates a tax credit called the small distiller domestic sourcing credit. It reduces the excise tax imposed under section 5001(a)(1) by $2.35 per proof gallon on distilled spirits produced in the United States. An "eligible distiller" is a taxpayer that: (1) produced not more than 100,000 proof gallons during each of the taxable year and the preceding taxable year, and (2) produced at least 90 percent of its proof gallons from domestically harvested materials. All persons treated as a single employer under section 52 are treated as a single taxpayer for the rule. A taxpayer may certify eligibility if a determination happens during the taxable year. If a taxpayer received the reduction but is not an eligible distiller, the taxpayer must pay a tax equal to the reduction (recapture). The changes apply to spirits produced after December 31, 2025.
Supporters describe the measure by its short title: the "Supporting Producers through Incentives from Rural Ingredients and Tax Relief Act." The bill is framed to provide tax relief to small distillers and to encourage sourcing of domestically harvested materials.
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