The bill would gradually phase out what's commonly known as the "bourbon barrel tax" starting in 2026 — with the goal of eliminating it by 2039. House Speaker David Osborne said the tax on the signature industry is causing fewer new distilleries to locate in the commonwealth.
"I do believe that there is a barrier to entry of new startups," the GOP leader argued. "We have seen over the last several years that about 40% of the new startups in distilling are locating outside the state of Kentucky."
But a number of Osborne's fellow Republicans crossed the aisle to vote against rolling back the tax, which helps fund local governments, schools, roads, and emergency services.
"It shifts the tax burden away from growing corporations to average taxpayers," Louisville Rep. Josie Raymond said. "I'm also listening closely to the people in cities and counties closest to the problem, the county judges sheriffs, superintendents in your communities, and they say no. We ought to call the bluff of this industry."
The House ultimately passed the bourbon barrel tax elimination 59-40, along with a bill designed to create a revenue floor for school districts that could lose funds. Those dollars would be coming from the budget reserve trust fund.
The bill now moves to the Senate end of the Capitol for consideration.
