There's nothing like cracking open a cold one at the end of a hot summer's day. But the dollars and cents you're drinking away without even realizing it can leave a bitter aftertaste. In addition to paying the federal tax of up to $0.58 per gallon*, consumers face state taxes for beer--typically paid by brewers and distributors before the beer reaches store shelves, but nonetheless impacting the final cost of a cold brew. In fact, 41% of the retail price of beer comes from taxes -- the most expensive ingredient, according to the Beer Institute.
Check out some 10 breweries worth the extra buck as you go through our list of the highest-tax states.
*Federal beer taxes are lower for smaller breweries.
Minnesota: $0.49 per Gallon
Minnesota's beer tax is on the higher side in part because the state imposes a sales tax specific to alcoholic beverages of 9% (instead of the state's 6.875% general sales tax rate).
But the steep alcohol-specific tax doesn't stop Minnesotans from getting in the beer game. Beyond the Minnesotan staples of Surly and Schell's, look to the smaller Bent Paddle Brewing located in Duluth, Minn, which credits its signature taste to its pure Lake Superior water. (That's about 90% of beer, after all.) Bent Paddle offers beers that "Bend the Tradition," including Wilderness Tuxedo, an American sour ale made with flavors of mango and guava.
Alabama: $0.53 per Gallon
Alabama's beer tax isn't exactly a bargain, but it's on the lighter side compared to other alcohols in the state. The tax on spirits is the fourth-highest in the country at $19.15 per gallon, and its tax on wine is the fifth-highest at $1.70 per gallon. So if you want a cheap drink in Alabama, you might want to turn to the tap.
When it comes to the craft beer scene, Alabama certainly had some catching up to do. But the state made considerable progress in the last decade -- it passed legislation in May 2009 to bump the maximum ABV content up to 13.9% from 6%; legalized on-premise beer sales in 2011; legalized the sale of bottles up to 25.4 ounces (750 milliliters, same as a wine bottle) in 2012; and allowed home brewing in 2013. Alongside the legislative progress, roughly a couple dozen breweries have popped up in the southern state. A few standouts have managed to garner national props. Good People Brewing made waves when its iconic IPA, the Snake Handler, was named to Men's Journal's 101 Best Beers in America for the first time in Alabama.
Maryland: $0.54 per Gallon
Like Minnesota, Maryland has a alcohol-specific sales tax for beer (9%, as opposed to the normal 6% state sales tax). When you tack that on to the average cost of a six pack in the state and convert, you're left with a bit over a half dollar in tax.
The beer scene in Maryland traces its roots to one of Baltimore's first manufacturing industries, the brewing of National Bohemian beer or "Natty Boh" (still around, as a Pabst brand). But the scene is much more diverse now, with dozens of other breweries. The largest is Flying Dog, with nearly 30 beer offerings, including the controversially named Raging Bitch, a Belgian-style IPA. Their latest venture: a partnership with Green Leaf Medical Cannabis to produce a marijuana-infused non-alcoholic beer called Hop Chronic IPA.
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North Carolina: $0.62 per Gallon
You'd think North Carolina would be on the lax side when it comes to taxing beer. After all, they're soft on other "sin taxes" -- the excise tax for cigarettes is only $0.45 per 20-pack, one of the cheapest in the U.S. But as it turns out, North Carolina has one of the heftiest beer taxes at the country.
If you still crave a brew despite the high tax, there are plenty of good options. Asheville, N.C., is home to the second-most breweries per capita of any city in the country. And it wouldn't be fair to mention what's been dubbed "Beer City USA" without naming the godfather of its scene, Oscar Wong, who opened Highland Brewing Company in a basement back in 1994. What began as a retirement hobby ended up launching the first successful brewery in the city, inspiring several dozens of others to follow.
Washington, D.C.: $0.71 per Gallon
It turns out Kiplinger's home base isn't the most economically sound place to catch an after-work draft. Poor us? The 71-cent beer tax goes with high sin taxes across the board here in DC -- wine is taxed at $1.83 per gallon (the 4th-highest in the country) and pack of cigarettes has a whopping $4.50 added.
While the nation's capital experienced a bit of a brewing dry spell for the second half of the last century, DC Brau filled the void in 2009 as the first packaging brewery the District had seen since 1956. And it wouldn't be D.C. if they didn't have to get past some bureaucratic red tape first. DC Brau founders Brandon Skall and Jeff Hancock were instrumental in the legalization of on-site brewing sales and growler usage in DC, paving the way for other breweries to follow. Among DC Brau's offerings: the Corruption IPA, which features on the back of the can a brief account of political skulduggery between Henry Clay and John Quincy Adams.
South Carolina: $0.77 per Gallon
South Carolina doesn't make it easy on brewers. Its $0.77 per gallon tax is one of the highest in the country. But other alcohol doesn't get as bad a deal as beer - the state's wine tax of $1.08 and spirit tax of $5.42 (both per-gallon figures) fall roughly in the middle of the pack in the U.S. But if you're still game for a cold one, South Carolina has a few big dogs to look out for.
The Palmetto Brewing Company revived brewing in South Carolina (dead since Prohibition) in 1993, and Westbrook Brewing is home to 100 original beers. Among the state's smaller breweries is COAST Brewing Co. The family-owned brewery uses all locally sourced ingredients to produce their brews, including 32.50 Kolsch and the HopArt IPA.
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Kentucky: $0.87 per Gallon
Kentucky levies a modest $0.08 per gallon excise tax on beer production, but then adds a 10.75% wholesale tax on brewers. When that's converted to a per gallon rate, it takes the total beer burden to $0.87 a gallon, the fourth highest in the country. But that's still better than wine, where Kentucky is the highest-tax state in the country. (The state has middling taxes on spirits, so maybe make it a bourbon and ginger?)
While Kentucky's distilleries outnumber its breweries by about 75 to 55, it still offers some great craft breweries. Against the Grain Brewery (a fitting name, no?) opened its doors as Louisville's first brewer-owned and operated brewery in 2011. The owners create unique beers in six main styles: session, hop, whim, malt, dark and smoke, with branding like "Citra Ass Down" and "Erogenous Rhone." They export to 43 U.S. states and more than 25 countries.
Hawaii: $0.93 per Gallon
Hawaii's beer tax is pretty steep, and it's not the only tax beer faces on its way to market. Hawaii has an unusual tax structure that hits many wholesale transactions. Collectively, Hawaii collects nearly $1,000 per capita through local excise taxes, the third highest amount of any state.
The big name in beer you've likely heard of has been around for over 25 years--Kona Brewing Co. But the "liquid aloha" drink was bought by Craft Brew Alliance in 2010, so much of its production is now in Portland, Ore., Portsmouth N.H., and Fort Collins, Colo.
If you're in Maui (or visiting), check out the up-and-coming Kohola Brewery in the heart of Lahaina. Founded by homebrewers, Kohola adds pineapple, lilikoi or coconut to give its beers a Hawaiian touch.
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Alaska: $1.07 per Gallon
Plenty of things are more expensive in Alaska, and beer is among them - due in part to being heavily taxed.
Alaskan Brewing Company was the first post-Prohibition brewery to open, in Juneau in 1986. While co-founder Marcy Larson was researching brewing before opening up shop, she discovered a beer recipe dating back to the state's Klondike Gold Rush era. That almost century-old recipe became the brewery's heralded Alaskan Amber. The brewery also adds local flavor by roasting malt over alder wood, and infusing sitka spruce tips into its winter ale.
Tennessee: $1.29 per Gallon
Tennessee has the highest beer tax in the country, a whopping $1.29 tax per gallon. Maybe stick to whiskey?
The Volunteer State continues to feel the legacy of prohibition, with some counties still opting to be dry (such as the one where Jack Daniels is distilled). Statewide, though, liquor laws affecting beer, especially ones with high alcohol content, have been loosened recently, leading to a strong uptick in the number of breweries. Among them is Bearded Iris Brewing, based in Nashville. which boasts a seemingly-endless array of variations on the traditional IPA. Another new/old name of note is Nashville Brewery, which revived a brewery and beer style that dates back to 1859.
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Copyright 2019 The Kiplinger Washington Editors