SB 5024
In CommitteeSenate
Wine/alcohol tax exemption
Providing a tax exemption for the first 20,000 gallons of wine sold by a winery in Washington.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill creates a tax break for small Washington wineries by reducing the wine excise tax to $0.0528 per liter on the first 20,000 gallons of table wine or cider they sell each year, and exempting those gallons from other wine taxes. The goal is to help small wineries survive economic challenges and grow.
- Reduces the wine tax rate for the first 20,000 gallons of table wine or cider a winery sells in a calendar year to $0.0528 per liter (down from the standard ~$0.20–$0.25+ per liter).
- Exempts those first 20,000 gallons from all other wine taxes under the law (except the $0.0025/liter Washington Wine Commission fee).
- Applies to both table wine and cider, and covers sales by domestic wineries and certificate holders acting as their own distributors.
- Requires taxes collected under the new lower rate to go into the Liquor Revolving Fund, with a portion allocated to Washington State University.
- Includes a sunset clause requiring legislative review in 2030 and 2035, with potential extension if the policy helps small wineries stay in business or grow.
- Does not apply to wineries that sell more than 20,000 gallons in a year — only the first 20,000 gallons per winery qualify for the reduced rate.
Who is affected
- Small Washington wineries (producing ≤20,000 gallons/year) — Small wineries that produce and sell up to 20,000 gallons of table wine or cider per year benefit from a significantly reduced tax rate ($0.0528 per liter instead of the standard ~$0.20–$0.25+ per liter), plus exemption from other wine taxes on that volume.
- Large or out-of-state wineries — Larger wineries and out-of-state wineries shipping to Washington customers continue to pay the full standard wine tax rates and are not eligible for the exemption.
- Wine distributors and retailers — Wine distributors and retailers who buy from small wineries may benefit from lower wholesale prices on the first 20,000 gallons, though they still collect and remit taxes as usual.
- State and local governments — State and local governments may see reduced tax revenue from wine excise taxes on the first 20,000 gallons per winery, but could gain long-term revenue from increased business activity and broader tax bases if small wineries grow.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (3)
The reduced tax rate ($0.0528/liter vs. ~$0.20–$0.25/liter) on the first 20,000 gallons significantly lowers operating costs for small Washington wineries, increasing their margins and improving viability — directly supporting small, locally owned businesses that employ Washington residents and contribute to rural economies.
Business & EmploymentPeopleRef: Sec. 1(1)(d)(i)By exempting the first 20,000 gallons from other wine taxes (except the Wine Commission fee), the bill reduces compliance complexity and administrative burden for small wineries, helping them redirect resources toward production, hiring, and expansion rather than tax compliance.
Business & EmploymentPeopleRef: Sec. 1(1)(d)(ii)The bill includes a sunset and review mechanism requiring evaluation of impacts on sales/use tax revenue and winery survival — if successful, increased business activity could generate broader tax revenue gains that offset the initial excise tax loss, benefiting the state’s overall fiscal health.
FinancialPeopleRef: Sec. 2(5)(c)
Potential Concerns (3)
The bill reduces state wine excise tax revenue by exempting the first 20,000 gallons per winery from most wine taxes (only the $0.0025/liter Wine Commission fee remains), which shrinks the Liquor Revolving Fund and could reduce funding for state services over time — especially impactful given the narrow scope of the exemption and the fact that only small wineries qualify, limiting total revenue loss but still representing a net fiscal drag.
FinancialLean industryRef: Sec. 1(1)(d)(ii)The tax break is structured to benefit only wineries producing ≤20,000 gallons/year — a threshold that excludes most commercial-scale wineries and may inadvertently favor small but already-prosperous operations over struggling micro-wineries that fall just above the cutoff, creating a cliff effect that could discourage scaling up.
Business & EmploymentIndustryRef: Sec. 1(1)(d)(i)Local governments that rely on alcohol tax revenue (e.g., cities with tasting rooms or distribution hubs) may see reduced revenue from the first 20,000 gallons per winery, potentially affecting local budgets for public safety, parks, or infrastructure — though the impact is likely modest given the narrow scope of the exemption.
Local GovernmentIndustryRef: Sec. 1(1)(d)(ii)
Who Is Most Affected
Small Washington wineries producing ≤20,000 gallons/year gain direct tax savings, improving cash flow and survival odds — especially valuable amid recent industry headwinds like wildfire smoke, pandemic disruptions, and climate volatility.
Wine distributors and retailers who buy from qualifying small wineries may benefit from lower wholesale prices on the first 20,000 gallons, potentially increasing their margins — though they still collect and remit taxes at the same rate, so net benefit is modest and indirect.
State and local governments lose some excise tax revenue on the first 20,000 gallons per winery, but may gain long-term revenue from increased business activity, employment, and broader tax bases if small wineries grow — net fiscal impact uncertain but likely slightly negative short-term.
Out-of-state wineries and large domestic wineries (producing >20,000 gallons/year) pay full tax rates and gain no benefit, potentially making Washington’s market relatively less attractive for them — but this is not the bill’s primary design goal.
Consumers may benefit from slightly lower wine prices at tasting rooms or local retailers if small wineries pass on savings — but given the narrow margin and small scale, price effects are likely minimal and not guaranteed.