H.R. 8631: Keeping Our Manufacturers from Being Unfairly taxed while Championing Health Act

This bill, titled the "Keeping Our Manufacturers from Being Unfairly taxed while Championing Health Act," aims to amend the Internal Revenue Code to provide specific tax exemptions for low alcohol by volume kombucha, which is a fermented beverage made from a blend of tea, sugar, and a symbiotic culture of bacteria and yeast.

Key Provisions of the Bill

Tax Exemptions for Low Alcohol Kombucha

The bill proposes that low alcohol by volume kombucha will be exempt from:

• Excise taxes as wine: Kombucha that meets the specified requirements will not be taxed under the provisions that apply to wine.
• Excise taxes as beer: Similarly, kombucha will not be subjected to taxes or regulations that apply to beer.

Definition of Low Alcohol by Volume Kombucha

To qualify for these tax exemptions, the bill defines low alcohol by volume kombucha as a beverage that:

• Is fermented solely using a symbiotic culture of bacteria and yeast.
• Contains no more than 1.25 percent alcohol by volume.
• Is sold or offered for sale as kombucha.
• Is derived from fermentable sugars (such as sugar, honey, and fruit juice) and plant materials (such as tea and coffee).

Effective Date

The changes outlined in this bill would take effect starting from the calendar quarters that begin after its enactment into law.

Relevant Companies

• KEG - This company produces alcoholic beverages, including kombucha, and may benefit from decreased tax burdens if the bill passes.
• KMB - Known for its beverage production, this company may see changes in its tax obligations related to kombucha products.
• ABEV - Ambev is a multinational beverage company that might be affected due to its involvement in the production of alcoholic beverages including kombucha.