By: Matthew Hoisl
Senior Manager, Tax Services
Eisner Advisory Group LLC

As breweries look for ways to maximize profitability, one often-overlooked area ripe with opportunity is the federal and state tax code. From rewarding innovation to offsetting hiring costs and investing in equipment, a range of tax credits and deductions can translate into significant savings for craft breweries.

Here’s a breakdown of what’s available and how to make the most of it in 2025:

Federal Tax Credits

Research & Development (R&D) Tax Credit

The Research & Development (R&D) Tax Credit is one of the most valuable incentives available to breweries. It offers up to 20% of qualified research expenses as a dollar-for-dollar credit against federal taxes.

You may be eligible if your team is:

Developing new beer recipes or formulations
Experimenting with fermentation or hopping methods
Testing new brewing equipment
Improving canning, bottling, or packaging processes
Conducting QA testing or creating prototypes

Special perks include:

Small breweries can apply up to $250,000 against payroll taxes
Retroactive claims available for the past three years
Many states offer stackable R&D credits
With the enactment of the One Big Beautiful Bill Act, domestic R&D expenses that were previously required to be capitalized may now be fully deducted in 2025 and 2026. For small breweries, there may also be an opportunity to amend 2022-2024 tax returns to retroactively claim full deductions for those R&D expenses.

FICA Tip Credit

If your brewery includes a taproom or restaurant with tipped staff, you could qualify for the FICA Tip Credit. This allows you to claim back the 7.65% employer share of Social Security and Medicare taxes on tips above $5.15/hour—leading to thousands in annual savings.

Work Opportunity Tax Credit (WOTC)

Breweries may be eligible to claim a tax credit equal to 40% of up to $6,000 in first-year wages paid to new employee who begin work on or before December 31, 2025, provided those employees perform at least 400 hours of services for the brewery and belong to a targeted group, which includes but is not limited to:

Veterans
Formerly incarcerated individuals
People receiving public assistance or facing barriers to employment

Federal Fuel Tax Credit

If your brewery uses fuel for off-highway purposes (e.g., running equipment), you may qualify for a refund on fuel taxes paid for non-taxable uses.

Federal Tax Deductions

Section 179 Deduction

Section 179 allows breweries to immediately deduct the full cost of qualified equipment (instead of depreciating it over several years).
For 2025:

Deduction limit: $2,500,000
A phaseout of the deduction begins once more than 4,000,000 of property is place in service in a year.

Eligible items include, but are not limited to:

Brewing and fermentation equipment
Canning and bottling lines
Office equipment and furniture
Business-use vehicles (limitations may apply)

Bonus Depreciation

Following the enactment of the One Big Beautiful Bill Act, 100% bonus depreciation is available for qualified property purchased and placed in service after January 19, 2025. Like the Section 179 deduction, bonus depreciation enables breweries to immediately deduct the full cost of eligible property. These two provisions can also be combined to maximize tax savings.

Energy Efficiency Deduction (Section 179D)

Section 179D offers $0.50 to $5.81 per square foot for qualified energy-efficient upgrades to commercial spaces, such as:

HVAC systems
Lighting upgrades
Hot water systems
Building envelope improvements

To claim the highest deduction, projects must meet prevailing wage and apprenticeship standards. Please note, in order for a project to qualify under section 179D, the construction must begin prior to June 30, 2026. Any projects that are started after June 30, 2026 are not eligible for this deduction.

Cost Segregation Studies

When breweries invest in new buildings or renovations, a cost segregation study can help reclassify assets to shorter depreciation periods (from 39 years to 5 or 15). Significant first-year deductions as the Section 179 deduction and bonus depreciation are only available for assets with a useful life of 20 years or less.

Massachusetts-Specific Incentives

R&D Credit

Massachusetts offers its own R&D credit, which can:

Be used alongside federal credits
Be retroactively claimed for up to three years
Support long-term financial planning

Other Considerations

Ordinary Business Deductions

Breweries can deduct a wide range of everyday operating expenses, including:

Raw materials and ingredients
Repairs and maintenance
Insurance premiums
Utilities
Professional development
Marketing and advertising

State Sales Tax Exemptions

Many states (including Massachusetts) offer exemptions on:

Brewing and manufacturing equipment
Raw materials used in production
Machinery used in the brewing process

Recommendations for Breweries

Prioritize R&D Credits: These often offer the biggest savings.
Consider Cost Segregation Studies: Especially for major renovations or new facilities.
Maximize Equipment Deductions: Leverage Section 179 and bonus depreciation.
Consult the Experts: Work with tax professionals who understand the beverage industry.
Keep Great Records: Documentation is key to claiming (and defending) any incentive.

Final Thought

With the right advisors and thoughtful planning, including consistent check-in meetings throughout the year, tax season can become an opportunity – not just an obligation. Whether expanding your facility, investing in innovation, or hiring new team members, these credits and deductions can significantly ease your tax burden.

Tax Credit & Deduction Opportunities for Breweries in 2025