Women hand holding an alcoholic drink backlit sun
Food - Drink
Taxes Play A Bigger Role In The Price Of Bourbon Than You Might Think
Over a recent five-year period, American whiskey prices spiked by 9%, with the cost of the average bottle jumping from $40.53 to $44.12, but many bourbon lovers know that favored brands can go upwards of $100 per bottle. Demand is certainly a factor in these price changes, but taxes are another large yet unexpected influence.
Taxes on bourbon are actually the most expensive aspect of its production, accounting for about 60% of the total cost. These taxes include the state, local, and federal excise varieties, as well as tariffs imposed on international sales, which are sometimes raised dramatically for reasons bourbon producers have little to no control over.
As an example, the most damaging levy for Kentucky's bourbon makers is the barrel tax: distilleries not only pay taxes on each barrel aging in their rickhouse, but pay it over and over each year. Kentucky is unique in levying this sort of penalty on native spirits, a practice is found nowhere else in the U.S. or internationally.