Kentucky's bourbon industry is very successful and doesn't need another tax cut


Recent Bourbon Industry Tax Breaks:

  • The Kentucky corporate tax rate reduced from 6% to 5%, in 2018.
  • Distilleries have significant property and payroll, which corporations were allowed to exclude from corporate tax calculations in 2018.
  • These tax breaks reduced distillery taxes so much they no longer pay enough corporate tax to even take advantage of provisions allowing them to offset property taxes with corporate taxes.
  • Between 2015 and 2022, over 100 state tax breaks were awarded to the bourbon industry by the Cabinet for Economic Development.
  • Local governments have subsidized the construction of bourbon warehouses by issuing industrial revenue bonds, which exempt those facilities from property taxes for between 30 and 40 years.
Now, already operating as a highly tax- exempt industry, bourbon distillers want even more, a repeal of the property tax on bourbon in storage - a tax that benefits our schools, fire departments, emergency services, libraries, counties, cities and other local services.

Public school educators, county officials and leaders of other local taxing districts oppose the bourbon barrel tax repeal. Here's why...

  1. The bourbon industry, much of which is owned by out-of-state and foreign corporations, is already one of the most tax-exempt industries in Kentucky.
  2. Public education is struggling. In real dollar terms, public education receives significantly fewer tax dollars NOW than in 2008.
  3. Decreased funding exacerbates school districts fiscal cliff.
  4. HB 5 impacts ALL Kentucky school districts through lost funding.

Learn more about these items here.

HB 5 supporters argue the 14-year phase out is as good a deal as school districts will get for repealing the bourbon barrel tax

  1. Legislators should be asking, "Who will fight the frequent fires at bourbon warehouses when our fire departments have been defunded by the bourbon barrel tax?"
  2. Legislators should reject the notion that eliminating this tax by a thousand cuts is better than repealing it all in one felled swoop.

Defunding our children's education to increase the bottom line for liquor companies is a terrible idea no matter how it's done.

Legislators should support the needs of public schools and other taxing districts that depend on bourbon barrel tax revenue.


Don't let bourbon distillers hold Kentucky hostage to the threat of leaving.

Kentucky bourbon is here to stay

  1. While bourbon could technically be distilled in any state, the limestone filtered water that gives bourbon its distinctive taste can only be found in much of Kentucky, southern Indiana, and northern Tennessee. Ninety-five percent of all bourbon is distilled in Kentucky.
  2. For marketing purposes, manufacturers will always want to distill and advertise their products as Kentucky bourbon.

Where will bourbon be aged in warehouses?

  1. Tax or no tax on stored bourbon, there are many reasons why distillers may move their inventory to other locations after being distilled in Kentucky.
  2. Bottling, which isn't always performed at the same site as distilling, labeling, and for distribution purposes as bourbon distilled in Kentucky needs to be distributed nationwide and worldwide as efficiently as possible.
  3. Bourbon is heavy and expensive to move. For distillers with significant warehouse and bottling infrastructure in Kentucky, the cost of moving likely outweighs any tax savings.

Will distillers relocate to other states?

  1. The threat of locating in other states or moving warehousing to other states is probably a greater possibility for newcomers to the market who have not yet established distilling, bottling, and warehousing facilitites in Kentucky.
  2. Existing distillers continue to expand their facilities and newcomers continue to open in Kentucky, as well.
  3. New and old distillers likely find significant value in marketing their products as Kentucky bourbon regardless of where it is warehoused or bottled.