H.R. 9407: Supporting Producers through Incentives from Rural Ingredients and Tax Relief Act

This bill would create a new federal tax credit for small distilleries that use mostly U.S.-grown ingredients.

What the tax break would do

The bill adds a new section to the Internal Revenue Code that would reduce the federal excise tax on certain distilled spirits made in the United States by $2.35 per proof gallon.

Who would qualify

The tax break would only apply to an “eligible distiller”, meaning a taxpayer that:

• Produced no more than 100,000 proof gallons in both the current tax year and the previous tax year; and
• Had at least 90% of its distilled spirits production in the current tax year made from domestically harvested materials.

If multiple businesses are treated as a single employer under existing tax rules, they would be counted together as one taxpayer for this limit.

How it would be claimed and enforced

A distiller could certify during the tax year that it qualifies for the credit. If a taxpayer later turns out not to have qualified, the bill would require it to pay back the amount of the tax reduction it received, through a recapture tax.

When it would take effect

The new tax credit would apply to spirits produced after December 31, 2025.

Overall effect

In practical terms, the bill would lower federal taxes for smaller U.S. distilleries that rely heavily on domestic agricultural inputs. It would not apply to larger distilleries above the production limit, and it would not apply to spirits that do not meet the domestic sourcing requirement.

Relevant Companies

• BUD — Anheuser-Busch InBev: not a distiller, but could be indirectly affected through competition in the broader alcoholic beverage market if small domestic spirits producers gain a cost advantage.
• DEO — Diageo: may be indirectly affected if the tax credit helps smaller U.S. spirits brands compete more effectively.
• STZ — Constellation Brands: could be indirectly affected through competition in the spirits segment, though the bill is aimed mainly at small distillers.