Proof Gallon & TTB Federal Excise Tax Calculator
Calculate proof gallons (PG) from wine gallons or bottle counts, evaluate Craft Beverage Modernization Act (CBMA) tax brackets, and model tax liability.
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Engineering Fundamentals: Proof Gallons & TTB Federal Excise Tax
Under United States federal law (26 U.S.C. § 5001), distilled spirits excise taxes are assessed not on physical liquid volume (wine gallons), but on Proof Gallons (PG)—a measure of actual ethanol content.
1. Proof Gallon Mathematical Definition
A Proof Gallon is defined as one US wine gallon of 100-proof spirit (50% alcohol by volume at 60°F):
Proof Gallons = Wine Gallons × (Proof / 100)- For an 80-proof spirit:
1 Wine Gallon = 0.80 Proof Gallons - For a 125-proof cask strength spirit:
1 Wine Gallon = 1.25 Proof Gallons
2. Craft Beverage Modernization Act (CBMA) Tax Tiers
The permanent CBMA tax provisions create tiered rates based on annual removal calendar volume:
- Tier 1 (Craft Rate): $2.70 per Proof Gallon for the first 100,000 PG. (Slashing tax per 80-proof 750mL bottle from $2.14 down to roughly $0.43).
- Tier 2: $13.34 per Proof Gallon from 100,001 to 22,230,000 PG.
- Standard Rate: $13.50 per Proof Gallon above 22,230,000 PG.
Frequently Asked Questions
What is the exact definition of a Proof Gallon (PG)?
Under 26 U.S.C. § 5002, a Proof Gallon is one liquid wine gallon containing 50 percent ethyl alcohol by volume at 60°F (100 proof). It is calculated as Wine Gallons multiplied by (Proof / 100).
How does the Craft Beverage Modernization Act (CBMA) benefit craft distilleries?
The CBMA provides a reduced Federal Excise Tax rate of $2.70 per Proof Gallon on the first 100,000 proof gallons removed from bond each year, compared to the standard historical rate of $13.50/PG. This saves craft distillers up to $1.71 per 750mL bottle of 80-proof spirits.
How much federal excise tax is owed on an 80-proof 750mL bottle at the craft rate?
One 750mL bottle is 0.1981 wine gallons. At 80 proof, it contains 0.1585 proof gallons. At the $2.70/PG craft rate, the federal excise tax is exactly $0.428 (~$0.43) per bottle ($5.14 per 12-bottle case).
When does a distillery move from Tier 1 ($2.70/PG) to Tier 2 ($13.34/PG)?
The $2.70 rate applies to the first 100,000 proof gallons removed from bond across all controlled group entities in a single calendar year. Starting with proof gallon 100,001, the rate jumps to $13.34/PG.