‘Kentucky Will Lose’: Whiskey Distillers Paid Over $50 Million In 2023 Barrel Taxes; Here’s What They’re Doing In Response

Distillers broke records this year in Kentucky, tracking 12.6 million aging bourbon barrels — and a $50 million barrel tax. (AP Photo/Mike Groll)

On Wednesday, the Northern Kentucky Tribune reported that distillers paid barrel taxes of more than $50 million in 2023 — a whopping 30% increase over last year. Though production is at an all-time high and Kentucky currently hosts a record-breaking amount of 12.6 million aging bourbon barrels, the taxes have proven to be a major liability for production costs.

Within the past five years, barrel taxes have grown by a whopping 122% and continue escalating. This is why House Bill 5, a bipartisan compromise signed into law in early 2023, intends to phase out this barrel tax over 20 years. The bill additionally protects funding for schools, fire departments and EMS services.

Though the polarizing bill has sown seeds of division — and some politicians, such as Republican Representative Candy Massaroni of Bardstown, have cited it as putting the tax burden on constituents — those working in the bourbon business would disagree.

“Last session, Kentucky’s family of distillers argued that disaster was coming for the home-grown industry if elected officials didn’t do something to rein in the ever-growing discriminatory barrel tax,” Kentucky Distillers’ Association President Eric Gregory said, according to the Northern Kentucky Tribune. “Thankfully, the Governor and our champions in the General Assembly saw where this was headed and found a sensible compromise to fix the barrel tax while protecting schools and local communities. This year’s barrel report — and the resulting massive barrel tax liability — prove their work was necessary and sets the Bourbon industry on a path to sustainability in Kentucky instead of across our border.”

The numbers were based on inventory reported on Jan. 1, which were sent to the Kentucky Department of Revenue for tax purposes.

New production was reported as increasing to 2.7 million barrels, marking the fifth year in a row that distillers filled over 2 million barrels.

“Everyone recognized the astonishing tax liability distillers are facing is unsustainable and would be for any business,” President and CEO of the Kentucky Chamber of Commerce Ashli Watts said. “Without our signature industries like Bourbon, Kentucky will lose.”

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