Fiscal Services Division
SF 123 – Barrel Tax Revenues, Brewpubs (LSB1365XS)
Staff Contact: Jeff Robinson (515.281.4614) email@example.com
Fiscal Note Version – New
Senate File 123 changes the deposit destination for certain State barrel (beer) tax revenues
from the State General Fund to the Wine and Beer Promotion Board Fund. The change applies
to the tax revenue received from locations within Iowa where the beer is manufactured and sold
at retail at the site of manufacture (brewpubs). The change is effective July 1, 2023 (FY 2024).
The control of alcoholic beverages in the State is regulated through Iowa Code chapter 123, and
the tax on beer sales is established in Iowa Code section 123.136. The beer tax is equal to
$5.89 per barrel ($0.19 per gallon). The beer tax applies to:
• Beer manufactured in Iowa for sale or sold at wholesale in Iowa.
• Beer imported into Iowa for sale or sold at wholesale in Iowa.
• Beer manufactured in Iowa and sold at retail on the manufacturing premises for
consumption off the premises.
• Beer manufactured in Iowa by special class “A” permittees for consumption on the
manufacturing premises. Special class “A” permittees are commonly known as brewpubs.
The gallonage tax does not apply to the following situations:
• Beer shipped outside of Iowa.
• Sales by a class “A” or special class “A” permittee to another class “A” or special class “A”
Iowa Code section 123.136(2) provides that all beer tax shall be deposited to the State General
Fund. However, Iowa Code section 123.143(2) provides that beer tax revenues collected on
beer manufactured by a class “A” permittee which owns and operates a native brewery shall be
credited to a special barrel tax fund to be used by the Economic Development Authority for the
purposes of Iowa Code section 15E.117 (promotion of Iowa wine and beer). This exception to
the General Fund tax deposit requirement does not apply to beer manufactured and sold at
retail on the premises.
The special barrel tax fund is called the Wine and Beer Promotion Board Fund. The Fund
received $0.2 million in beer tax generated by native beer sales and $0.2 million in wine tax
generated from native wine sales during FY 2022. The Fund also received a transfer of
$1.0 million from the Liquor Control Act Fund.
Major FY 2022 expenditures from the Fund include:
• Iowa State University — $250,000
• State aid to various organizations — $124,000
• Iowa Restaurant Association — $53,000
• Personal services (Economic Development Authority) — $50,000
• Advertising and publicity — $39,000
The Fund began FY 2022 with a balance of $0.4 million and ended with a balance of
The Alcoholic Beverages Division estimates that beer tax currently collected from special class
“A” permittees and deposited to the State General Fund totaled approximately $60,000 during
FY 2022. This equates to the sale of 316,000 gallons of beer manufactured and sold at retail by
Changing the destination of beer tax revenue generated from beer manufactured and sold at
retail by Iowa brewpubs from the State General Fund to the Wine and Beer Promotion Board
Fund is projected to decrease General Fund tax revenue by $60,000 in FY 2024 and future
fiscal years. Revenues deposited to the Wine and Beer Promotion Board Fund will increase by
the same projected amount.
The initial cost of Alcoholic Beverages Division information technology updates needed to
implement the change is projected to be less than $20,000. The increased costs would be
financed through the Liquor Control Act Fund. Once computer and other tax collection systems
are updated, no ongoing additional costs are expected.
Alcoholic Beverages Division
State accounting records
/s/ Jennifer Acton
February 14, 2023
Doc ID 1368993
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in developing this
fiscal note is available from the Fiscal Services Division of the Legislative Services Agency upon request.