‘Outrageous That Kombucha Is Taxed Like Beer’: Politicians Push for Bill to Stop Taxing Kombucha the Same as Alcohol

(Photo: Tyler Nix/Unsplash)

Two Oregon representatives reintroduced legislation to change federal laws that tax kombucha companies the same as beer and other alcohol. While Kombucha does contain alcohol, when done properly, it is at low percentages which are not intoxicating, usually around 0.5% ABV.

Senate Finance Chairman Ron Wyden (D-Ore.) and U.S. Representative Earl Blumenauer (D-Ore.) want to stop Kombucha from being subject to the same excise taxes intended for alcoholic beverages. 

“It’s time to update alcohol tax laws to exempt kombucha from excise taxes,” Wyden said in a statement. “My KOMBUCHA Act would do just that to protect small businesses and create more jobs in Oregon and nationwide.”

For this bill, KOMBUCHA is used as an acronym meaning ‘‘Keeping Our Manufacturers from Being Unfairly Taxed while Championing Health Act.’’

The tax code has a section, section 5042, that exempts cider and wine from taxes in certain instances. Alcoholic cider is exempt from taxation the same as wine when it is not produced in a bonded wine cellar and when not marketed as wine. Also, wine made for personal or family use is not subject to taxes. 

The proposed bill would add an exemption for “low alcohol by volume kombucha,” defined as less than 1.25 ABV. 

“It is outrageous that kombucha is taxed like beer. This is an antiquated legacy of the prohibitionist era and it is past time to end it. Our legislation will relieve small businesses from these unnecessary tax burdens and support a growing industry in Oregon and across the country,” said Blumenauer.

While some versions of the fermented tea beverage known as Hard Kombucha are equal in alcohol percentage to some beers, many of these alcoholic kombuchas have a moderate ABV of around 3.5%-5.5% which is similar to most light beers and hard seltzers. 

However, most kombucha has a minimal alcohol content with a mere 0.5% ABV typically. This low ABV technically makes it non-alcoholic, as a drink is only classified as alcoholic if it contains more than 1.2% ABV. The industry standard has even come under fire when lawsuits were filed at certain brands for producing kombuchas with misleading alcohol content warnings.

The kombucha industry reportedly employs about 7,500 people and is projected to be worth $5.25 billion by 2025. The potential tax dollars generated by the industry are significant and its connection with the alcohol industry may make this bill difficult to navigate. 

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