Legislation aimed at helping grow the hard cider industry in Vermont and New York took an important step forward after the U.S. Senate Finance committee passed the CIDER Act.
The CIDER Act (S.1531 – Cider Investment and Development through Excise Tax Reduction Act) was originally introduced in 2013 by U.S. Senator for Vermont Patrick Leahy and Sen. Charles Schumer of New York.
S.1531 seeks to amend the Internal Revenue Code to revise the definition of hard cider for purposes of the excise tax on distilled spirits, wines and beer.
Hard cider is taxed at the same rate as beer, but the outdated federal definition of hard cider today allows only up to seven percent alcohol by volume. Any hard cider with an alcohol content exceeding this level gets taxed at the higher rate for wine. A certain level of carbonation likewise triggers an even higher rate of taxation as a sparkling wine.
The new meaning, updated to reflect current market expectations and manufacturing practices, would hike the allowed alcohol by volume in hard cider from seven percent to 8.5 percent. It also increases the allowed carbonation level to 6.4 grams per liter, and allows pears to be used in the manufacturing process.
This means that a much wider array of cider products will be labeled and taxed as such, instead of being treated like wine or champagne. The updated carbonation level brings the U.S. definition in line with the European Union’s definition, which means that local hard cider producers will be more competitive against European products in overseas markets.
When the bill was introduced, Sen. Schumer noted that it would enable the over 650 apple growers and 20 existing hard apple cider producers that existed at that time in New York State to expand their business. New York is the second largest apple producer in the United States, harvesting 29.5 million bushels annually on over 41,000 acres across more than 650 farms.
Sen. Schumer said in a release that the current federal definition of hard cider under the IRC is restrictive to both current producers as well as those hundreds of growers that would like to enter production of this craft beverage.
The rising popularity of hard cider has likewise led to significant growth in the industry in Vermont, driving the state’s value-added agriculture model through partnerships between local orchards and cider makers.
Sen. Leahy said in a release that Vermont is known for quality products, and value-added agriculture like cider making is a key building block for Vermont’s emerging markets and for the state’s economy.
Vermont Hard Cider Company CEO Dan Rowell said in the release that the hard cider industry is poised for real growth both in Vermont and across the country, and these proposed changes will allow Vermont cider makers to fully realize that potential, bringing solid economic growth to the Vermont landscape.