Looking forward to a mint julep on Kentucky Derby Day? You might be interested to know that a bit of each bourbon-soaked cocktail funds school districts, police departments, and other local services in the Bluegrass State. The money flows through Kentucky’s one-of-a-kind bourbon barrel tax, a levy on spirits aging in barrels. It’s a big deal for distillers, who must pay the tax, and municipalities, which derive significant revenue from the roughly 11 million barrels of bourbon inventoried across Kentucky.
That could change soon. After a Bourbon Barrel Taxation Task Force studied the matter last year, senior lawmakers recently introduced legislation to gradually phase out the tax until it's eliminated in 2039 with the aim of giving local jurisdictions time to adjust to lost revenues.
On this episode of Talking Tax, Bloomberg Tax senior reporter Michael J. Bologna digs into the unusual history of the tax and the current efforts to repeal it with Mark F. Sommer, tax practice group leader with Frost Brown Todd LLP in Louisville. BONUS: Sommer shares his mint julep recipe! (Derby Day is May 6, in case you haven't put it on your calendar yet. )
Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.