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Outdated Fed Tax Law Says That When A Cider Is Too Carbonated And Mixed With Other Fruits Like Peaches or Berries It Gets Taxed A Whopping 1,400% More Per Gallon - Flattening Biz For NY Cideries And Orchards & Impeding New Bubblier Fruit Ciders People Love

Schumer, Author Of The CIDER Act, Which Helped Jumpstart Upstate NY’s Craft Cideries, Now Is Announcing For The First Time New Legislation To Close The Bubble Tax Loophole To Bring In New Phase Of Growth for Upstate NY Cideries & Apple Growers

Schumer: Bubble Tax Shouldn’t Flatten Southern Tier Cider Industry – Time To Pop This Arcane Rule Hurting NY Cideries 

Standing at Awestruck Ciders, U.S. Senate Majority Leader Charles E. Schumer today revealed how Upstate NY cideries are being hit with a convoluted federal ‘Bubble Tax’ increasing costs and hindering the production of new delicious bubblier ciders and ciders mixed with fruits that people love. Schumer is now pushing a new bill, the Bubble Tax Modernization Act, to ‘pop’ this arcane fed tax law to help cidermakers add more of the popular fruitier & bubblier ciders to their taps, boost farmers, and help grow next phase of Upstate NY’s booming craft cider industry.

“Right now, the arcane federal ‘bubble tax’ is the flattening innovation and business for Upstate NY’s craft cideries. There is no reason that craft cidermakers like Awestruck should get hit with a massive tax increase if they want to make fruiter bubblier cider, which is what customers say they want. It hurts our craft cidermakers, hurts consumers, hurts our farmers, and is slowing the growth of this booming industry in Upstate NY,” said Senator Schumer. “That is why I am proud to support the Bubble Tax Modernization Act to finally pop this convoluted carbonation tax hamstringing the craft cider industry. Since I led the CIDER Act to passage in 2016, we have seen Upstate NY’s cidermakers boom by fixing a similar outdated tax law, and this can help the industry enter its next phase of growth. New York is the core of America’s apple industry and we want our craft cidermakers to be able to tap the markets full potential by making the fruitier bubblier cider that people love!”

“When we first started Awestruck - we only made flavors with herbs and spices because we couldn't afford the higher bubble tax brackets.  This tax hinderance has stood in the way of our innovation for too long. Our consumers want fruit flavors, our consumers want sparkling bubbles - carbonation is such a significant part of the beverage taste experience! This legislation would remove barriers to allow us to grow. Thank you Senator Schumer for supporting this legislation and for your long standing support of the Cider Industry,” said Patti Wilcox, Awestruck Ciders Co-Founder

Schumer said all alcohol is subject to varying tax rates, but cider producers are especially impacted by outdated carbonation tax law that literally ‘tax air,’ while beer, hard seltzer, and soda do not have similar increased tax rates. Schumer explained the “bubble tax,” kicks in for cider makers when they mix in additional fruits to their ciders like blackberries, peaches, raspberries (excluding apples or pears) and as the carbonation level increases. The senator said ciders with mix in fruits are incredibly popular, as are bubblier hard ciders, and the real-world impact of this is cidermakers are disincentivized from making ciders consumers demand.

Schumer explained, “The bubble tax makes no sense. It would be like saying Cherry Coke has to be flatter than regular Coke, otherwise you get taxed more. Nobody wants that.” 

The tax disparity is huge and harming Upstate NY cideries. Standard hard apple & pear ciders, are taxed at approximately $.23 per gallon to about $1.07 for fruit ciders/wine, which allows them an even playing field with similar beverages. BUT if the “bubble tax” is triggered either by mixing in other fruit and making a bubbly product on par with other ciders above 0.392 grams of CO2 it shifts that beverage to being classified as a “sparkling wine” tax bracket, bringing costs up to a whopping $3.40 per gallon. That is a 1,400% increase from a baseline cider, and well over $2 more per gallon for making the cider people demand.

Schumer said this forces cideries to either avoid making the products their customers demand because it is too expensive, raise costs on consumers, or, in some instances, try to make the product flatter just to make it cost effective for production. Awestruck produces around 12,000 gallons of cider per month.  If they wanted to make ciders mixed with other fruits at the same level of carbonation as our mainline ciders, because of the bubble taxes, it would cost an additional $36,888 per month in taxes.  That would make taxes their single largest expense per can of cider - more than apples, more than packaging, more than labor! 

That is why Schumer said he is now pushing the Bubble Tax Modernization Act of 2024 in the Senate to pop this arcane federal tax law that is preventing the industry from tapping its full potential and making it harder for consumers to get the ciders they love.  The bill would remove this differentiation in tax brackets the current law by allowing other fruit ciders the same carbonation levels afforded to hard apple and pear ciders—without charging producers the higher sparkling wine tax rates, giving consumers and producers the fruitier, bubblier cider they want at a price they can afford.

Senator Schumer has been one of the longest supporters of Upstate New York’s cider industry, and the leader on legislation which has led to its growth. Going back to 2013,  Schumer stood at the DeFisher Fruit Farm and pushed the International Revenue Code (IRC) to reform its definition of hard apple and pear ciders to reduce a tax that negatively impacts cider producers. Just three years later, Schumer announced passage of the CIDER Act he championed, which successfully lowered taxes on hard ciders made with apples & pears. The CIDER Act has been wildly successful in growing the cider industry and in creating new markets for New York apples.   According to the New York State Cider Association, in 2020, the hard cider industry contributed $1.7 billion in total economic impact, held 6,148 jobs, and generated $520 million in total wages for New York state workers.