Tax Guide for Beer Brewers and Distributors
Ingredients

This section provides guidance on the application of sales and use tax to ingredients and products used in the beer brewing process. Sales of ingredients and products to brewers may or may not be subject to tax, depending on whether they fall into one of the following categories:

  • Food Products—Sales of food products intended for human consumption are not subject to sales and use tax. Therefore, ingredients used in the production of beer that are considered food products, such as grains, hops, and yeast are not subject to sales and use tax.
  • Raw Materials—Sales and use tax does not apply to sales made to brewers of non-food products or ingredients that are purchased for incorporating into the finished product (beer) for sale.
  • Manufacturing Aids—Sales and use tax applies to the sales of non-food products or ingredients that are purchased for use in manufacturing or producing the beer and not for the purpose of physically incorporating the item into the finished product.

Important Note: The application of sales and use tax for the ingredients and products listed on this page is based on their use in beer brewing as described in the Code of Federal Regulations (CFR), Section 25.15, Materials for the production of beer. If the actual use of a product or ingredient is different than its described category on this page, (as it aligns with CFR, Section 25.15), then you may not rely upon the stated tax application for your purchases of the listed product or ingredient. Instead, you should contact the California Department of Tax and Fee Administration (CDTFA) for further guidance on the correct tax application regarding your specific use of the product or ingredient in question. Please visit our How to Contact Us page.

Food Products Are Not Subject to Sales and Use Tax

Sales of food products are not subject to sales and use tax when used to produce beer.

Examples of food products used in the production of beer:

  • Grain of any kind
  • Glucose
  • Sugar
  • Molasses
  • Gelatin
  • Dry and liquid malt extracts
  • Honey
  • Maple syrup
  • Hops
  • Fruit
  • Fruit juice
  • Fruit concentrate
  • Herbs
  • Spices
  • Yeast and yeast products
  • Enzymes (amylases, proteases, lipases, and cellulases)

Raw Materials or Ingredients Incorporated into Beer May Be Purchased for Resale

Brewers may purchase raw materials for resale (without the payment of tax) that become component parts of the finished product that will be resold.

Examples of non-food ingredients include those used in the brew to obviate cloudiness or to improve foaming qualities, and chemicals added to brew water to improve the taste of beer.  These ingredients may be purchased for resale when the items are physically incorporated into the beer.

The following ingredients and products may be purchased for resale when incorporated into, and resold with, the finished product:

  • Activase
  • Burton Salts
  • Calcium Chloride
  • Carbon Dioxide
  • Century Special
  • Cerevase
  • Collupulin
  • D & S Schaumade
  • Diastase
  • Gum Arabic
  • Gypsum (Calcium Sulfate)
  • Heading Powder
  • Hydrated Lime
  • KMS Crystals
  • Lactic Acid
  • Liquidase
  • Mitt Body Foam
  • Nitrogen Gas
  • Oak Chips or Particles
  • P/L 104
  • P/L 400
  • Papain
  • Pepsin
  • Rapidose
  • Reinfirm
  • Sodium Bisulfite
  • Sulfuric Acid
  • Tannic Acid
  • Tansul
  • Tartaric Acid

Please note, if the actual use of these products or ingredients is different than described above (as it aligns with CFR Section 25.15, Materials for the production of beer), you may not rely on the stated application of tax. Instead, you should contact the CDTFA for further guidance on the correct sales and use tax application regarding your specific use of the ingredient or product in question (How to Contact Us).

If you make beer for personal consumption, and do not intend to resell the beer you make, you may not purchase the above ingredients without sales and use tax. These ingredients may only be purchased without sales and use tax when they are intended to be incorporated into beer that will later be resold.

Purchases of Manufacturing or Processing Aids Are Subject to Sales and Use Tax

Sales and use tax applies to sales of products that are consumed in manufacturing beer and are not physically incorporated into the finished product. If property is purchased primarily as an aid in the manufacturing process, it is subject to sales and use tax, even though some portion may remain in the finished product.

Examples of manufacturing aids used to produce beer include:

  • Products that stabilize color before fermentation.
  • Chemicals that assist yeast during fermentation.
  • Clarification or fining agents used to clarify beer (and typically filtered out of the product).
  • Products that precipitate a chemical reaction during or after fermentation, prior to bottling or selling beer.

The sales of the following products to beer brewers when used as manufacturing aids are subject to sales and use tax:

  • Activated Carbon
  • Chitosan
  • Colloidal Clay
  • Defoaming Agents
  • Dicalite
  • Gelatin
  • Inerto
  • Irish Moss
  • Isinglass
  • Polyclar
  • Silicon Dioxide
  • Talc Sierra Snow

Please note, if the actual use of these products or ingredients is different than described above (as it aligns with CFR Section 25.15, Materials for the production of beer), you may not rely on the stated application of sales and use tax. Instead, you should contact the CDTFA for further guidance on the correct sales and use tax application regarding your specific use of the ingredient or product in question (How to Contact Us).

Filing a Claim for Refund

If you believe you have paid tax in error on your purchases of ingredients or products used in beer brewing, you may be entitled to a refund of the overpaid sales and use tax.

A refund may generally be claimed at any time within the statute of limitations (generally three years). If you are seeking a refund for overpaid taxes on qualifying purchases of manufacturing or research and development equipment, the procedures are different depending on whether the original purchase was subject to sales tax or whether the original purchase was subject to use tax. The California Use Tax Information webpage provides more detailed information about use tax.

If the tax you paid was sales tax, you must request a refund from the retailer. The retailer would then file a claim for refund with the CDTFA. As the purchaser, you will need to provide the retailer with a completed resale certificate (CDTFA-230, General Resale Certificate, or similar form) and documented evidence that the original purchase should have qualified as raw material intended to be incorporated into the finished product. However, if the item on which you paid sales tax is a food product, a resale certificate is not necessary.

If the tax you paid was use tax (typically use tax applies when you purchase from an out-of-state vendor), you may file a claim for refund directly with the CDTFA. Simply complete form CDTFA-101, Claim for Refund or Credit, and mail it to the address provided. Indicate the reason for the refund is that the property purchased qualifies as a food product or raw material intended to be incorporated into the finished product.

If you paid sales or use tax on a manufacturing aid or other taxable property and subsequently resold it before making any use of it, you may take a deduction of the purchase price of the property on your sales and use tax return. You must take the deduction under the heading "Tax-paid purchases resold" on your return in the same period in which the sale of the property is included.

For more information on how to file a claim for refund, see publication 117, Filing a Claim for Refund.