Wine — One New Jersey Tax That’s Not Too High
If New Jersey's highest-in-the-nation property taxes are driving you to drink, take comfort that the state is firmly in the middle of the pack for its taxes on wine and distilled spirits.
A recent report by the Tax Foundation, an independent tax policy nonprofit, found that New Jersey ranks 24th in its wine excise tax rate, at $0.88 per gallon.
The distilled spirit excise tax stood at $5.50 a gallon, 27th among the states, according to an earlier report in the Tax Foundation's series.
Ulrik Boesen, Tax Foundation senior policy analyst on excise taxes, said all things considered, those are good numbers for the Garden State.
"The big danger is always to be the outlier within your region. This is not the case with New Jersey, so they're not going to see a lot of inflow from neighboring states," Boesen said. "New Jersey finds itself in a very, let's say, competitive rate, which would not encourage that sort of behavior. I think that's a positive."
Boesen said every state varies in the formulation of its tax structure, with some states focusing more on consumption taxes to help pay for services. Kentucky ranks No. 1 in the United States for its wine tax, at $3.30 per gallon; Washington state, meanwhile, taxes 10 times that amount for spirits, leading the nation at $33.22 a gallon.
In New Jersey, the budding wine production industry may be one factor driving taxes down.
"I think there can also be some cultural reasons, or even some industrial reasons," Boesen said. "So, a state like California has a very low tax on wine. They want to encourage wine production."
While New Jersey falls slightly behind other states to the north and east for wine taxes, like New York, Connecticut, Massachusetts, Vermont, and Maine, if you were to go in other directions, you might find a situation worse than that of the Garden State.
"If you go just south of New Jersey, the tax starts getting a little bit higher, both Virginia and North Carolina, D.C., West Virginia have higher taxes," Boesen said.
Delaware and Maryland are also in the top 10 nationally. And Pennsylvania is a different story entirely — it imposed a tax on alcohol in 1936 to pay for damages from a flood, Boesen said, and never revoked it, eventually making it permanent and hiking it to 18%.
By the way, if you like a cold brew instead (and we're not talking about coffee), the Tax Foundation just last week released new numbers for 2020 indicating that New Jersey does better for beer taxes than either wine or spirits, at $0.12 per gallon, 42nd in the country.