Bubble Tax Modernization Act of 2025

Bill Number

H.R. 4613

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-07-22: Referred to the House Committee on Ways and Means.

Last Updated

2025-11-21T12:04:19Z

AI-Generated Summary

Purpose

The "Bubble Tax Modernization Act of 2025" (H.R. 4613) aims to simplify federal wine taxation by eliminating the separate tax treatment for mead (a wine made primarily from honey) compared to other low-alcohol wines. This change ensures mead is taxed at the same rate as similar low-alcohol still wines, promoting fairness in the alcohol tax system.

Key Provisions

• Amendment to Tax Code: Updates Section 5041(h) of the Internal Revenue Code of 1986 to redefine "low alcohol by volume wine" for tax purposes under subsections (a) and (b)(1).
• Low alcohol by volume wine is treated as still wines (non-sparkling) containing no more than 16% alcohol by volume (ABV).
• The definition includes wines with:
• No more than 0.64 grams of carbon dioxide per 100 milliliters (a measure to ensure the wine is not sparkling; the Secretary of the Treasury can allow minor tolerances for practical production reasons).
• Less than 8.5% ABV.
• Effective Date: The changes apply to wine removed from production facilities (e.g., for sale or distribution) after December 31, 2025.

Significant Changes to Existing Law

• Previously, mead was often classified and taxed differently from low-ABV still wines, potentially at higher rates similar to sparkling wines due to minor carbonation or production differences.
• This bill removes that distinction, integrating mead into the lower tax category for low-ABV wines (which face reduced excise taxes compared to higher-ABV or sparkling varieties).
• No changes to overall wine tax rates, but it streamlines classification to avoid separate rules for mead.

Potential Impacts

• On Government Agencies: The Internal Revenue Service (IRS) and Alcohol and Tobacco Tax and Trade Bureau (TTB) will need to update regulations and enforcement for wine classification and tax collection, potentially reducing administrative complexity but slightly decreasing short-term tax revenue from mead.
• On Citizens: Mead producers and sellers benefit from lower taxes, which could lead to more affordable prices for consumers. It supports small craft beverage businesses without directly affecting individual taxpayers.
• On International Relations: Minimal impact, as this is a domestic tax adjustment; it may indirectly encourage U.S. mead exports by improving competitiveness, but no foreign policy implications.

Main Stakeholders Affected

• Mead Producers and Wineries: Primary beneficiaries, including small-scale and craft operations, as they gain access to lower tax rates (e.g., rates as low as $1.07 per gallon for low-ABV still wines versus higher for other categories).
• Consumers: Indirectly positive, through potential price reductions on mead products.
• Government Entities: IRS and TTB, for implementation and revenue adjustments.
• Broader Alcohol Industry: Other low-ABV wine makers may see neutral or positive effects from a simplified tax structure.

Notable Legal, Constitutional, or Political Implications

• Legal: Enhances equity in the tax code by aligning mead with similar products, reducing potential disputes over classification. The bill delegates minor regulatory flexibility to the Treasury Secretary, which is standard for tax administration and unlikely to face challenges.
• Constitutional: No apparent issues; it falls under Congress's authority to levy taxes (Article I, Section 8) and does not infringe on states' rights or individual liberties.
• Political: Supports the growing craft beverage sector, appealing to bipartisan interests in agriculture and small business (introduced by representatives from both parties). It modernizes outdated tax rules without broad fiscal controversy, though it could spark minor debate on alcohol tax equity.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Salinas, Andrea [D-OR-6]

Cosponsors (9)

Rep. Van Orden, Derrick [R-WI-3], Rep. Panetta, Jimmy [D-CA-19], Rep. Kelly, Mike [R-PA-16], Rep. Fitzpatrick, Brian K. [R-PA-1], Rep. Bonamici, Suzanne [D-OR-1], Rep. Hoyle, Val T. [D-OR-4], Rep. Tenney, Claudia [R-NY-24], Rep. Pingree, Chellie [D-ME-1], Rep. Edwards, Chuck [R-NC-11]

Recent Actions

• 2025-07-22: Referred to the House Committee on Ways and Means.
• 2025-07-22: Introduced in House
• 2025-07-22: Introduced in House

Bill Versions

• Bubble Tax Modernization Act of 2025 — issued 2025-07-22 — PDF (2 pages)