KOMBUCHA
- Bill Number
- S. 4457
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-04-30: Read twice and referred to the Committee on Finance.
- Last Updated
- 2026-05-13T15:55:09Z
AI-Generated Summary
Purpose
This bill, titled the "Keeping Our Manufacturers from Being Unfairly taxed while Championing Health Act" or "KOMBUCHA Act," aims to exempt low-alcohol kombucha (a fermented tea beverage) from federal excise taxes and regulations applied to alcoholic beverages like wine and beer under the Internal Revenue Code.
Key Provisions
- Definition of low alcohol by volume kombucha: A beverage that:
- Is fermented only by a symbiotic culture of bacteria and yeast (SCOBY).
- Contains no more than 1.25% alcohol by volume (ABV).
- Is marketed and sold as kombucha.
- Is made from fermentable sugars (e.g., sugar, malt, honey, fruit juice) and plant materials (e.g., tea, coffee).
- Exemptions:
- From wine taxes and regulations under subchapter F (amends Section 5042(a)).
- From beer taxes and regulations under subchapter G (amends Section 5053).
- Exemptions are subject to regulations issued by the Secretary of the Treasury (overseeing IRS and Alcohol and Tobacco Tax and Trade Bureau, or TTB).
- Effective date: Applies to calendar quarters beginning after the date of enactment.
Significant Changes to Existing Law
- Adds a specific exemption for low-alcohol kombucha to the wine tax code (Section 5042(a)), previously silent on this beverage.
- Inserts a new subsection in the beer tax code (Section 5053(i)), shifting low-alcohol kombucha from potential taxation/regulation as beer or wine to full exemption.
- Redesignates an existing beer exemption subsection to accommodate the new one.
Potential Impacts
- Kombucha industry: Reduces production costs by eliminating excise taxes (currently up to $3.40–$13.50 per gallon for low-alcohol beverages, depending on classification) and easing regulatory compliance (e.g., no need for TTB permits or record-keeping).
- Government agencies: IRS and TTB must develop and enforce new regulations; minor revenue loss from untaxed kombucha sales.
- Citizens/consumers: Likely lower prices and wider availability of kombucha, promoted as a health drink.
- No apparent impacts on international relations.
Main Stakeholders Affected
- Primary: Kombucha producers and manufacturers (especially small businesses facing high compliance costs).
- Secondary: Consumers of kombucha; IRS and TTB (for enforcement and rulemaking).
- Others: Beverage industry competitors (e.g., low-alcohol beer/wine makers) potentially affected by market shifts.
Notable Legal, Constitutional, or Political Implications
- Legal: Provides clear statutory clarity, reducing disputes over kombucha's classification (previously treated variably as beer, wine, or non-alcoholic). Relies on Treasury regulations for implementation, avoiding immediate overreach.
- Constitutional: None significant; standard congressional authority over taxes (Article I, Section 8).
- Political: Supports emerging health-food sector amid debates on alcohol regulation; introduced by Sen. Wyden (D-OR) and referred to Senate Finance Committee, signaling bipartisan industry appeal without major controversy.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Recent Actions
- 2026-04-30: Read twice and referred to the Committee on Finance.
- 2026-04-30: Introduced in Senate
Bill Versions
- Keeping Our Manufacturers from Being Unfairly taxed while Championing Health Act — issued 2026-04-30 — PDF (3 pages)