News Story

Michigan’s No. 10 In State Excise Tax On Liquor Tax — With Other Taxes And Fees That Follow

State government is also the sole wholesaler here of hard liquor

The state of Michigan imposes the nation’s tenth-highest excise tax on liquor, according to data released by the Tax Foundation in January.

Although retail stores are technically the ones responsible for paying excise taxes on the distilled spirits they keep in stock, the tax burden falls on customers in the form of higher prices, Tax-Rates.org reported.

Using data collected by the Distilled Spirits Council of the United States and the federal Alcohol and Tobacco Tax and Trade Bureau, the Tax Foundation determined that Michigan’s excise tax on liquor stands at $11.95 per gallon.

The state of Washington has the highest excise tax on distilled spirits in the nation, at $33.22 per gallon, followed by $21.95 in Oregon, $19.93 in Virginia and $19.89 in Alabama. The only other states to surpass Michigan’s tax rate were Utah, North Carolina, Iowa, Alaska and Maine.

At the other end of the spectrum were Wyoming and New Hampshire, both of which are among the 17 “control states” where liquor sale transactions are conducted in stores operated by the government.

But excise taxes are not the only levy imposed by the state of Michigan on liquor. The state is the exclusive wholesaler of spirituous, or hard liquor, which it sells at a standard statewide markup. Retail buyers also pay sales tax on liquor purchases, which were not included in the Tax Foundation’s figures.

The rules and taxes states impose on alcohol sales are generally a product of measures taken when the nation ended its 13-year experiment in Prohibition, which ended in 1933. Some states levy bottle or case fees, depending on the size of the containers. Other measures include a wholesale tax rate, and distributor and retail license fees that are then converted into a per-gallon excise tax, according to the Tax Foundation.

Certain states may impose different rates that vary depending upon where the liquor was produced, where it was purchased, and how much alcohol it contains.