The States That Tax Beer the Most (2026)

In the U.S., taxes account for a higher percentage of the cost of beer than ingredients, labor, and other materials combined. It’s a result of levies collected by several parties. A federal excise tax ranges from $0.11 to $0.58 per gallon of fermented malt beverages based on production, quantity and brewery location. Each state and Washington D.C. also imposes individual excise taxes on beer, and, from there, municipal-level levies and retail sales taxes drive the price up.

Tennessee continued to impose the highest tax on beer in 2025 at $1.29 per gallon, according to data from the tax policy nonprofit Tax Foundation. Alaska and Hawaii recorded the second- and third-highest taxes per gallon at $1.07 and $0.93, respectively, landing them in the same spots as in last year’s report.

After tying for third with Alaska in data from 2024, Kentucky ranked fourth since reducing its tax rate from $0.93 to $0.89 per gallon. D.C. rounded out the top five with a $0.79 charge per gallon.

The Tax Foundation calculated the total tax burden of each state and Washington D.C. by combining their respective excise and sales taxes. Other year-over-year notable changes were Connecticut’s drop from $0.24 to $0.19 per gallon, a three-cent jump in Arkansas and North Dakota, and a two-cent increase in Utah, according to the report.

The table below lists the states with the highest total tax burdens on beer in 2025.

The States With the Highest Taxes on Beer

Rank
State
Tax Rate per Gallon

1
Tennessee
$1.29

2
Alaska
$1.07

3
Hawaii
$0.93

4
Kentucky
$0.89

5
Washington D.C.
$0.79

6
South Carolina
$0.77

7
North Carolina
$0.62

8
Maryland
$0.60

9
Alabama
$0.53

10
Florida / Georgia
$0.48

Credit: Tax Foundation

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