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On July 4, 2025, Congress passed the sweeping “One Big Beautiful Bill” (OBBB), delivering long-awaited, permanent tax and regulatory relief to small and independent breweries across the United States. While the name may sound tongue-in-cheek, the legislation’s impact on craft beer is anything but trivial.

The OBBB bundles years of lobbying efforts from the Brewers Association, state guilds, and allied hospitality and agriculture sectors into one comprehensive package. It’s a rare and historic win — the kind of federal action that promises to reshape the economics of brewing for years to come.

Here’s what it does and why it matters:

Permanent Section 199A Deduction for Pass-Throughs

The bill makes Section 199A of the Internal Revenue Code permanent, preserving the 20% qualified business income (QBI) deduction for pass-through entities such as LLCs and S corporations.

Since more than 90% of craft brewers are structured as pass-throughs, this move ensures long-term tax parity with larger C-corporations and protects reinvestment dollars that would otherwise go to the IRS.

Full Expensing of Domestic R&D Costs

The bill restores and makes permanent the ability to immediately deduct domestic research and development (R&D) expenses. Previously, brewers had to amortize those costs over five years.

This benefits any brewer experimenting with ingredients, refining packaging, or developing new fermentation techniques — reinforcing innovation and adaptability in a fast-moving industry.

100% First-Year Bonus Depreciation Restored

Breweries invest heavily in capital equipment — fermenters, canning lines, chillers, and more. The OBBB restores 100% bonus depreciation for qualified property, allowing brewers to immediately write off those investments in the year purchased.

The provision is retroactive to January 1, 2025 and made permanent, providing financial flexibility and strong incentives to modernize and grow.

CO₂ Protection via Section 45Q Reform

As breweries rely on CO₂ for carbonation and production, concerns arose that tax credits for CO₂ sequestration (under Section 45Q) would create shortages for commercial users.

The OBBB amends the code to treat CO₂ utilization the same as sequestration — ensuring breweries can continue to access a stable, affordable supply of food-grade CO₂.

Tipped Worker Tax Credit

The bill introduces a tax credit for tipped workers on up to $25,000 in income. While it primarily benefits employees who earn enough to pay federal income tax, this provision supports brewery taproom and brewpub workers, helping increase their take-home pay and retention.

Interest Deduction Reinstated (IRC 163(j))

Craft breweries that have taken on debt — whether for expansion, equipment, or real estate — benefit from a return to EBITDA-based limitations on business interest deductions, increasing allowable write-offs and easing debt service burdens.

A Boost for Growth, Innovation, and Sustainability

Taken together, these provisions free up cash, reward investment, and make it easier for brewers to:

• Innovate with new recipes and techniques
• Expand production capacity or taproom space
• Adopt sustainable practices like CO₂ recapture and water reuse
• Compete more effectively with larger beverage corporations

💡 Why It Matters to Craft Brewers

Final Take: A New Era for Independent Brewing

For years, craft brewers fought legislative battle after battle to gain ground on tax, regulation, and access. The passage of the OBBB represents a historic pivot — a moment when the industry’s needs were not only heard but addressed comprehensively.

This isn’t just another bill. It’s the foundation for the next generation of American craft beer.

Cheers to that.

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