H.R. 4613: Bubble Tax Modernization Act of 2025

This bill, titled the Bubble Tax Modernization Act of 2025, proposes changes to the U.S. tax code regarding the classification of certain types of wine. The primary focus is to eliminate the current distinction between mead and low alcohol by volume (ABV) wine for taxation purposes.

Key Provisions

• The bill amends Section 5041(h) of the Internal Revenue Code of 1986.
• It defines low alcohol by volume wine as still wines containing no more than 16 percent alcohol by volume.
• The legislation specifies that low alcohol by volume wine must also contain:
• No more than 0.64 grams of carbon dioxide per hundred milliliters of wine, with possible regulations allowing for minor variations.
• Less than 8.5 percent alcohol by volume.
• The changes would apply to wine removed from inventory after December 31, 2025.

By making these modifications, the bill aims to standardize the taxation of meads and low ABV wines, potentially simplifying tax compliance for producers of these beverages.

Implementation Timeline

The provisions of this bill are set to take effect for any wine that is removed from inventory after December 31, 2025, meaning that the changes would not affect any wine sold before this date.

Impact on the Industry

This legislation could influence the wine industry, particularly producers of mead and low alcohol wines, by aligning their tax treatment and possibly affecting pricing and market competition.

Relevant Companies

• CNNB - Companies that produce wine and mead products may benefit from simplified tax reporting.
• DEO - Beverage companies that include low alcohol wines in their portfolio could see impacts in compliance costs.
• SRNE - Producers of low alcohol beverages may experience shifts in market dynamics as a result of the new tax structure.