Do you know why so many hard ciders are 6.9% ABV? I had heard some talk about 7% ABV being some sort of cut off as far as taxes, and was curious enough to do some research:
Under current federal laws, hard cider by definition is only allowed to be up to 7% alcohol by volume (ABV) before it gets taxed at the more expensive rate for wine. Additionally, there are even limits on the level of carbonation before it gets taxed at the very expensive rate for champagne. Therefore, many ciders weigh in at 6.9% ABV, just under the 7% cutoff.
This is a very current issue, as the Cider Investment and Development through Excise Tax Reduction (CIDER) Act aims to combat this and other cider classification & taxation discrepancies. Cidermakers are currently lobbying legislators to enact the CIDER Act, which would update the tax code to treat hard cider differently than wine or champagne.
It can be difficult for cidermakers to predict & precisely control the ABV and carbonation levels of their ciders. Scott Donovan, a member of the board of the U.S. Association of Cider Makers, says hard cider’s alcohol content can vary between 5.5% and 8% ABV, depending on the type of apples used and the time of the year the cider is made (source). I’ve also seen products with higher and lower ABV levels.
This isn’t all about taxes. There is also a significant economic potential, as apparently there are currently many apples that could be used for cider that aren’t. However, taxes are a major reason. This effects the consumer as a cider which costs more to produce & sell is typically priced higher. Also, some cidermakers desire to carbonate their ciders higher, but currently avoid doing so due to the “champagne tax” (source).
Current federal tax levels (source):
- $1.07 per gallon, still wines < 14% ABV
- $1.57 per gallon, still wines < 21% ABV
- $3.15 per gallon, still wines with 21-24% ABV
- $3.40 per gallon, champagne & other sparkling wines (3.92 grams per liter carbonation; source)
- $3.30 per gallon, artificially carbonated wines
- $0.23 per gallon, hard cider which is a still wine derived primarily from apples or apple concentrate & water, containing no other fruit product, and containing 0.5% to 7% ABV
- There is however a $0.056 credit for the first 100,000 gallons by a small cidery not producing not more than 150,000 gallons per year (source).
By comparison, beer is taxed at $0.58 per gallon, or $0.23 per gallon for the first 60,000 gallons produced by small scale breweries which produce less than 2 million gallons per year (source).
IN SUMMARY: Currently ciders which are more than 7% ABV are taxed as wine. Also, regardless of ABV, if they have a high level of carbonation, they are taxed as champagne. Both wine & champagne tax rates are significantly higher than those for beer. Also, consider that wine & champagne typically have a lower ABV than cider, so when considering a tax per gallon it isn’t very consistent.
The goals of the CIDER Act are:
- Allow higher carbonation in cider without it being taxed like champagne
- Include pears in the definition of “hard cider”
- Align the alcohol-content standard for hard cider with the natural sugar content of apples (at least 8.5% ABV)
The CIDER Act can help level the playing field between beer, wine, & cider. They tried to pass this in 2013, but no such luck (source). In February 2015 this passed the Senate Finance Committee, and now awaits the Senate floor (source). In August there were some additional meetings (source). So, hopefully there will be progress soon. Note that there are also taxes at the state level, which are separate from this act.