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How alcohol taxes figure into your Margarita Day celebration

It's National Margarita Day! Each Feb. 22, the focus is on appreciating this popular tequila-based cocktail. Or as we call it here in Texas, every day.

FX Archer provides his margarita recipe giphy
FX/FXX TV's spy-turned-private detective Sterling Archer offers his margarita recipe. If, however, you're looking for a drink that's a bit more elaborate that the basic one preferred by the animated (in so, so many ways!) and self-absorbed bon vivant, check out the Cooking Channel's top 28 margarita recipes.

Personally, I prefer beer. But if a 'rita is your drink, I hope you enjoy a safe happy hour today — I hear they are quite fun even on Zoom — with your fellow fans of this blue agave beverage.

I'm all for restaurants and other hospitality venues opening up as soon as it's safe, but from a financial if not strictly liquid perspective, a virtual get-together probably will save you a few bucks. That includes the savings from not needing a taxi or ride service if you celebrate a bit too much.

Tacking on tequila taxes: If you do go out, the final price of your actual margarita at your favorite tavern depends on many things.

There's the cost of the bartender's expertise and the server's attention to your drinking needs. Federal and state (plus the District of Columbia) tax collectors also push up tequila's — and all other distilled spirits' — price thanks to excise taxes.

Details on Uncle Sam's distilled spirits' tax cut is show below in the table from the Alcohol and Tobacco Tax and Trade Bureau, a division of the U.S. Treasury.

US federal distilled spirits excise taxes 2021

As the TTB (yep, that's the acronym the agency uses) table shows, distilled spirits taxes are based on amounts of the potent potables produced:

  • A tax rate of $2.70 per proof gallon is levied on the first 100,000 proof gallons in production.
  • A tax rate of $13.34 per proof gallon applies to the proof gallons of 100,001 to 22.23 million proof gallons in production.
  • Any proof gallons exceeding 22.23 million face an excise tax of $13.50 per proof gallon.

Quick, aside. Here's a tidbit you can use to impress your pals at happy hour: A proof gallon is one liquid gallon that is 50 percent alcohol. You might want to jot it down in case you don't share your distilling knowledge until you've had a few.

States excise and more add-ons: As for the states and Washington, D.C., the table below compiled the Federation of Tax Administrators show the 2021 state tax rates on distilled spirits.

FTA state distilled spirits excise taxes 2021-1 FTA state distilled spirits excise taxes 2021-2
High, low and median distilled spirits tax rates: As the FTA notes, the national median tax on liquor is $3.77 per gallon.

Washington state assessed the largest excise tax on booze, a whopping $14.27 per gallon. Alaska is close on the Evergreen State's heels. The Last Frontier's distilled spirit excise tax is $12.80 per gallon.

The lowest per gallon distilled spirits excise tax is $1.50 in Maryland and neighboring Washington, D.C. Insert your own jokes here about how folks working in the shadow of the federal government deserve a tax break on their imbibing.

As for Capitol Hill's southern neighbor, Virginia is one of 17 states where the government directly controls the sales of distilled spirits. Revenue in these states is generated from various taxes, fees, price mark-ups and net liquor profits. d

Adding up other levies: One of those various taxes is the states' general sales taxes.

If your local coronavirus safety regulations allow and you're comfortable going out for a properly precautioned pandemic meal and a margarita, you'll likely owe sales tax on the restaurant fare, food and, of course, beverages, alcoholic or not.

You'll escape this levy, though, if you live in one of the five jurisdictions without statewide sales taxes on food or anything. They are Alaska, Delaware, Montana, New Hampshire and Oregon.

Also, all my North Carolina readers, if in this time of COVID-19 you prefer take-out or delivery of your food and drinks, you're in tax luck since the Tar Heel State's general sales tax applies to on-premise sales only.

And speaking of the pandemic, which we unfortunately still are, you might be able to enjoy your margarita more in a few months. National Tequila Day is July 24. Even better, this year that's on a Saturday!

Maybe by this summer, enough of us will be vaccinated that we can get back to some semblance of normal, including toasting with our friends at our favorite eateries and bars.

You also might find these items of interest:


Coronavirus Caveat & More Information
In 2021, we all still are dealing with extraordinary circumstances,
both in our daily lives and when it comes to our taxes.
The COVID-19 pandemic and efforts to reduce its transmission
and protect ourselves and our families means that,
for the most part, we're focusing on just getting through these trying days.

But life as we knew it before the coronavirus will return,
along with our mundane tax matters.
Here's hoping that happens soon!
In the meantime, you can find more on the virus and its effects on our taxes
by clicking Coronavirus (COVID-19) and Taxes.






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