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Microdistillery Credit and Annual Production Report

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The Credit 

If your microdistillery produces 40,000 or less proof gallons in a calendar year (January 1 – December 31), you qualify for the microdistillery credit.

The microdistillery credit is $1.33 per liter sold, up to 100,000 liters. The total credit cannot exceed the current fiscal year's tax liability or $133,000, whichever is less.

You claim the credit the following fiscal year. For instance, if you produced 40,000 or less proof gallons January 1 – December 31, 2023, you could use the credit July 1, 2024 – June 30, 2025.

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The Annual Report

You must report the number of proof gallons you produced during the calendar year when you file your December Microdistillery Excise Tax Return in e-Services.

How do I file the report?

If you key your return information into e-Services, enter the number of proof gallons you produced during the calendar year in the first screen that opens when you file your December return.

If you import our Microdistillery Excise Tax Microsoft Excel template into e-Services, complete the Production Report worksheet (last tab in the workbook) and import the file into the December filing period.

How do I calculate proof gallons?

To convert gallons into proof gallons:

  1. Multiply the gallons by the percent of alcohol by volume.
  2. Multiply by that number by 2.
  3. Divide that number by 100.

For example:

  1. 100 gallons x 40% alcohol by volume = 4000
  2. 4000 x 2 = 8000
  3. 8000/100 = 80 proof gallons
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