When it comes to enjoying a pint, not all states are equal in the taxes they levy on beer or other alcoholic beverages. The tax rates on alcohol can vary significantly across the United States, with some states charging much higher taxes than others. These taxes can influence everything from the price of a six-pack to the cost of a cocktail at your favorite bar.
We have researched various online forums, including this document by the Tax Foundation, to curate a list of 12 states with the highest taxes on beer and alcohol.
Washington
Washington charges a staggering $36.55 tax per gallon on alcohol. This is the highest in the nation, making alcohol considerably more expensive in the Evergreen State. The high tax rate is partly due to the state’s approach to curbing excessive alcohol consumption and generating revenue for public services. In 2021, Washington generated around $213 million in alcohol-related tax revenue. With a beer tax of $0.26 per gallon, Washington’s beer prices are among the highest in the country, further discouraging excessive drinking.
Oregon
Oregon has long been known for its craft beer scene, but that passion costs a tax rate of $22.86 per gallon. Interestingly, Oregon has one of the lowest alcohol consumption rates per capita, with a 20% drop in its hop harvest due to declining sales. This indicates that the tax might be doing its job. In 2023, Oregon’s alcohol tax amounts to more than $40 million, with mark-up liquor sales bringing in around $625 million between 2021-2023.
Virginia
Virginia’s tax on alcohol sits at $22.06 per gallon, with the Virginia Alcoholic Beverage Control Authority (ABC) controlling the sale and distribution of alcohol. This monopoly allows the state to set high taxes, which, in 2023, contributed around $1.5 billion to the state’s general fund. This revenue is vital for Virginia, funding everything from education to law enforcement.
Alabama
Alabama isn’t far behind, with a tax rate of $21.69 per gallon. The state has some of the strictest alcohol laws in the country, and the alcohol tax policy is often linked to its conservative stance on alcohol consumption, aiming to discourage excessive drinking. In 2021, the state collected approximately $272 million in alcohol taxes, with a beer tax of $0.53 per gallon. This hefty tax contributes to making alcohol less accessible, particularly in rural areas where prices are already high.
North Carolina
North Carolina imposes a tax of $16.40 per gallon on alcohol. The state’s tax revenue from alcohol has been on the rise, reaching nearly $104.64 million between 2022 and 2023. North Carolina uses a portion of this revenue to fund alcohol prevention and education programs, as alcohol-related traffic incidents have been a significant concern. In 2022, there were approximately 11,000 alcohol-related crashes across the state, with 24% of fatal incidents involving drunk driving.
Utah
Utah is known for its stringent alcohol laws, so it’s no surprise that it has a high tax rate of $15.92 per gallon. Utah’s predominantly conservative population and influence from the Church of Jesus Christ of Latter-day Saints leads to its tough stance on alcohol. Despite these restrictions, Utah collected over $195.69 million in alcohol taxes in 2022. This revenue supports state health initiatives and alcohol treatment programs.
Iowa
Iowa might be known for its corn, but it also has a hefty alcohol tax of $14.10 per gallon. This high tax rate reflects the state’s effort to balance alcohol availability with public health concerns. In 2023, Iowa generated nearly $13.20 million in beer tax revenue alone, with a beer tax rate of $0.19 per gallon.
Michigan
Michigan’s tax on alcohol is $13.57 per gallon. The state’s robust craft beer industry has been growing, but the taxes on alcohol remain a significant expense for consumers. Despite the high taxes, Michigan continues to attract beer enthusiasts from all over the country, as the beer tax in this state stands at a meager $0.20 per gallon.
Alaska
Alaska might be more remote than other states, but its alcohol taxes are far from negligible. The state imposes a $12.80 tax per gallon on alcohol. Given Alaska’s unique challenges, including high transportation costs, the overall price of alcohol is significantly higher than in the lower 48 states. The alcohol tax revenue generated is primarily used to fund public services in this sparsely populated state.
Idaho
Idaho rounds out the top ten with a tax rate of $12.15 per gallon. The state’s approach to alcohol taxation is part of its conservative fiscal policy. In 2023, Idaho generated nearly $121 million in alcohol tax revenue, which was utilized to fund state services, including education and public safety.
Maine
Maine’s tax on alcohol is $11.96 per gallon. The state has a strong tradition of local brewing. Still, the taxes make alcohol slightly more expensive than in neighboring states. Over the past five years, the state has seen a significant increase in revenue from taxes on alcohol, tobacco, marijuana, and gambling, with these sources now generating $353 million annually, which represents 7% of the state’s $5.1 billion yearly budget. The state also uses a portion of this revenue for alcohol prevention programs, particularly among youth.
Ohio
Ohio imposes an alcohol tax of $11.38 per gallon. Ohio’s tax policy is designed to strike a balance between generating revenue and addressing public health concerns, particularly in urban areas where alcohol-related issues are more common. Despite the relatively moderate tax rate, Ohio continues to see a steady demand for alcohol, with the average resident drinking between 2 and 2.49 gallons in 2023. The state also imposes a beer tax of $0.18 per gallon, which helps maintain a consistent revenue stream while keeping beer prices competitive.
