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Fri July 4, 2014
Ky. Distilleries Set to Receive Bourbon Barrel Tax Credits Next Year
A new state law aims to soften the impact of property taxes on Kentucky’s bourbon distilleries.
Bourbon barrels are subject to the state’s ad valorem tax even as they sit, aging, for many years. Now, after the passage of House Bill 45, distillers will be able to get a tax credit based on their property tax payments.
Paul Tomaszewski is the owner and head distiller at the small M.B. Roland Distillery in Christian County. He says now that his distillery is growing and producing more barrels at a faster rate, the tax credit will be progressively helpful.
“Now that tax credit is stepped over five years at 20 percent, so we’ll only be able to write off 20 percent of that I believe this year, or at the end of this year,” Tomaszewski said. “And then 40 percent the next year, 60 and so on, up to 100 percent after five years.”
The tax credit can only be used toward capital improvements to the distillery.
“The intent there is for the local area to experience any of the expenditures associated with those improvements,” Tomaszewski said.
Tomaszewski said M.B. Roland might use their future tax credits to finance facility or equipment upgrades.