TTB Compliance Tool

Free TTB Proof Gallon Tax Calculator: CBMA Federal Excise Tax for US Distilleries

Convert wine gallons to proof gallons, apply the correct CBMA tier rate from 26 U.S.C. 5001, track your year-to-date position against the 100,000 PG threshold, and get your payment schedule, bottle count, and projected DSP bond exposure in one calculation.

26 U.S.C. 5001 CBMA Tier Tracking Payment Schedule Per-Bottle FET DSP Bond Estimate PDF Report
📊 TTB Proof Gallon Federal Excise Tax Calculator
TTB CBMA 2020 Permanent Rates
Total liquid volume before proofing. From tank gauge in US gallons.
gal
Measured at 60 degrees F per TTB Gauging Manual. Enter the corrected proof.
Proof
1 200 80
Proof gallons removed from bond so far this calendar year before this batch. Enter 0 if this is your first removal of the year.
PG
Used to extrapolate your annual FET and determine payment schedule. Auto-set to current month.
💰

Enter your wine gallons and proof above, then tap Calculate to see your CBMA tax breakdown, YTD tier position, and payment schedule.

Your CBMA Savings on This Batch
–
💵
This Batch
Proof Gallons –
ABV / Proof –
Active Tier –
Tax Breakdown by Tier
Tier 1 PG ($2.70) –
Tier 1 Tax –
Tier 2 PG ($13.34) –
Tier 2 Tax –
Std Rate PG ($13.50) –
Std Rate Tax –
Total FET Comparison
FET (CBMA blended) –
Effective Rate –
Standard Rate (no CBMA) –
Tier 1 CBMA Capacity Used
0 PG 0% used 100,000 PG
Remaining Tier 1 –
YTD Total After This Batch –
Bottling and Operations
Bottles Yielded –
FET per Bottle (CBMA) –
FET per Bottle (standard) –
Projected Annual FET –
Filing Frequency –
Est. DSP Bond (2-wk withdrawal) –
Cumulative FET: CBMA Rate vs Standard $13.50/PG Rate
The gap between the green and red lines is your total CBMA savings across all production. The Tier 1 cliff at 100,000 PG is where the rate jumps from $2.70 to $13.34.
CBMA Tiered Rate (green = savings zone)
Standard Rate ($13.50/PG)
Tier 1 limit = 100,000 PG
Federal Taxation Framework

Wine Gallons, Proof, and the Federal Taxation System for American Distilled Spirits

If you are a licensed Distilled Spirits Plant operator in the United States, or if you are in the process of applying for a DSP permit through the TTB, one number will shape your entire financial model more than any other: the federal excise tax you owe every time spirits leave your bonded premises for sale or consumption. Understanding exactly how that number is calculated is not optional. It is the foundation of your cost structure, your pricing strategy, and your cash flow planning.

The TTB collects this tax using a unit of measurement called the proof gallon. It is a deceptively simple concept that confuses new distillers constantly. A proof gallon is not a physical gallon of liquid. It is a calculated unit equal to one US liquid gallon of spirit at exactly 100 proof, which is 50 percent alcohol by volume. A gallon of 80-proof vodka contains 0.8 proof gallons. A gallon of 160-proof neutral spirit contains 1.6 proof gallons. A gallon of 100-proof bourbon is exactly one proof gallon.

The TTB formula is straightforward. Multiply your wine gallons (total liquid volume) by the proof, then divide by 100. Your result is proof gallons. That is what the TTB taxes, not the liquid volume, but the alcohol content inside that volume. This ensures that a distillery producing high-proof neutral spirits at 190 proof pays tax proportional to the actual alcohol content it is removing from bond, rather than getting a tax break by diluting the spirits before removal.

The Gauging Temperature Rule That Every DSP Must Follow

Here is where most new distillers make their first compliance error. The TTB requires all proof and volume measurements to be corrected to 60 degrees Fahrenheit, their standard gauging temperature. If you take a hydrometer reading at 78 degrees in your warm stillhouse on a summer morning, the reading you see is not your legal proof. You must apply a temperature correction using TTB Gauging Manual Table 1 to determine the true proof at 60 degrees F before you enter any number into your records or tax calculations.

The practical difference is real. Alcohol expands as temperature rises, which means a hydrometer reads slightly lower proof at higher temperatures. A spirit that reads 79.5 proof at 78 degrees F might be 80.2 proof when corrected to 60 degrees. Over thousands of gallons and dozens of batches a year, the uncorrected error accumulates into a compliance problem that the TTB will find on audit. You can find the official gauging manual with correction tables at TTB.gov Gauging Manual. Every DSP should have a printed copy within reach of the still.

This calculator applies the proof-to-PG formula exactly as the TTB specifies in 27 CFR Part 19. Enter your corrected proof at 60 degrees F (not your raw thermometer reading) and the output will match what you should report on Form 5110.40.

Why Proof Gallons Drive Every Other Compliance Number

Once you understand proof gallons, every other TTB reporting requirement becomes clearer. Your monthly operations reports for production, storage, and processing all require you to record spirits movements in both wine gallons and proof gallons. Your DSP bond coverage is calculated on proof gallons. Your CBMA tax benefit is capped at 100,000 proof gallons. Your payment schedule frequency is determined by your total annual FET liability, which is calculated on proof gallons.

This is why the YTD proof gallon tracker in our calculator is not a cosmetic feature. It is the most operationally critical input for mid-year batches. If you have already removed 87,000 proof gallons from bond this year and your next batch produces 20,000 proof gallons, only 13,000 of those qualify for the Tier 1 CBMA rate of $2.70 per proof gallon. The remaining 7,000 immediately step up to $13.34 per proof gallon, a nearly 5x increase. Without tracking your running total, you will miscalculate your tax liability and likely underpay, which creates an underpayment penalty with TTB.

📑 CBMA Tier Structure (26 U.S.C. 5001)
TierProof GallonsRate / PGAnnual Max Savings
Tier 1 First 100,000 PG $2.70 $1,080,000
Tier 2 Next 22.13M PG $13.34 $352,000
Standard Above 22.23M PG $13.50 No reduction

PG = Wine Gallons x (Proof / 100)
FET = PG x applicable rate
Savings = PG x ($13.50 – rate)

Example: 500 gal at 80 proof
PG = 500 x 0.80 = 400 PG
FET (CBMA T1): 400 x $2.70 = $1,080
FET (Standard): 400 x $13.50 = $5,400
Savings: $4,320
Permanently made law in 2020. The CBMA reduced rates for domestic distillers were made permanent by the Consolidated Appropriations Act of 2021 (Pub. L. 116-260). They do not expire. Small US craft distilleries can plan long-term around the $2.70 Tier 1 rate.

⏰ TTB Filing Frequency Thresholds
Annual FET LiabilityFiling Schedule
Up to $1,000Annual
$1,001 to $50,000Quarterly
Above $50,000Semi-Monthly
Semi-monthly payments are due on the 14th and last day of each month for the preceding period. Quarterly payments are due on the 14th of the month following the close of each quarter. Source: TTB Reporting Requirements.
Calculator Methodology

Step-by-Step: How This CBMA Tax Compliance Tool Calculates Your Federal Excise Tax

Every number this calculator produces comes from formulas codified in 26 U.S.C. 5001, 27 CFR Part 19, and the TTB Gauging Manual. There is no estimation or approximation in the core tax calculation. Here is exactly what happens when you press Calculate.


1
Proof Gallon Conversion
Multiply wine gallons by proof and divide by 100. This is the TTB-standard formula. If ABV mode is selected, the tool first doubles the ABV to get proof.
PG = WG x (Proof / 100)
2
Tier Position Check
The YTD proof gallons already removed are added to the batch PG to determine total cumulative removals. The calculator then maps each portion of the batch to the correct tier.
3
Split-Tier Tax Calculation
If this batch straddles a tier boundary, the tool splits the PG mathematically. The first portion gets the lower rate, the remainder gets the higher rate. Both are calculated precisely using Big.js decimal arithmetic.
4
Payment Schedule & Bond
Projected annual FET is extrapolated from the current month’s cumulative FET (YTD total including this batch). The result is mapped to TTB thresholds ($1K / $50K) to determine filing frequency.
5
Bottle Yield Breakdown
Batch PG is divided by the PG per bottle at the selected bottle size to estimate total bottles. FET per bottle at both the CBMA rate and standard rate is calculated to help distillers price product accurately.

A Note on Big.js Decimal Precision

Federal excise tax calculations involve multiplying large proof gallon quantities by small decimal rates. Floating-point arithmetic in standard JavaScript can introduce rounding errors that compound across thousands of proof gallons. This calculator uses Big.js, a decimal library that performs all monetary arithmetic in arbitrary precision, to ensure the result you see matches what a correctly-implemented TTB accounting system would produce. The calculation is not an approximation. It is the exact formula as specified in federal law.

TTB Payment Schedules

The Annual FET Filing Frequency Rules That Determine Your Cash Flow and DSP Bond Size

One of the most practically important outputs of this calculator is your projected payment schedule. The TTB does not give all DSPs the same payment timeline. Your filing frequency depends on your annual FET liability, and getting this wrong has real financial consequences.

The smallest DSPs, those projecting no more than $1,000 in annual FET, may file and pay on an annual basis. That is roughly 370 proof gallons of 80-proof spirits per year, or about 1,850 standard 750ml bottles annually. Very small home-scale or startup operations might qualify for this, though any DSP that grows past this threshold during the year must adjust.

Most small to mid-size craft distilleries fall in the quarterly filing tier, covering DSPs with annual FET liability between $1,001 and $50,000. At the CBMA Tier 1 rate of $2.70 per proof gallon, $50,000 in annual FET equals approximately 18,500 proof gallons removed per year, which at 80 proof is about 23,150 wine gallons. That is a meaningful production level that many craft distilleries will cross within their second or third operating year.

Above $50,000 in projected annual FET, the TTB requires semi-monthly filing, meaning you file and pay twice a month. Semi-monthly payments are due on the 14th and the last day of each calendar month for the preceding period. This means if you remove spirits from bond on August 3rd and August 10th, both removals appear on your semi-monthly return due August 14th. Cash flow management at this level requires knowing your FET liability before you remove product, not after.

The DSP bond estimate in this calculator uses the standard TTB approach for new distilleries: estimate your total removals in a two-week period (for semi-monthly filers) or three-month period (for quarterly filers) and multiply by $13.50, the standard rate at which bonds are typically sized. You can find the full bond coverage requirements in 27 CFR Part 19, Subpart D, or at TTB.gov DSP Application Guide.

Real US Distillery Examples

Three American DSPs Running Real TTB Proof Gallon Tax Calculations Across Different Production Scales

📍 Louisville, Kentucky
Small Craft Bourbon DSP: Staying Firmly in Tier 1

A small-batch bourbon distillery in Louisville runs three barrels per week. In August, they distill a batch: 380 wine gallons of new make bourbon at 125 proof coming off the doubler. They have removed 42,000 proof gallons YTD, well inside Tier 1.

PG = 380 x (125/100) = 475 PG YTD after: 42,000 + 475 = 42,475 PG Tier 1 applies (under 100,000) FET: 475 x $2.70 = $1,282.50 Standard rate: 475 x $13.50 = $6,412.50 CBMA Savings: $5,130.00

Their 2-week withdrawal bond exposure (quarterly filer): 475 PG x $13.50 / 2 weeks x 13 weeks = ~$41,681 bond exposure per quarter.

CBMA Savings on This Run
$5,130.00
📍 Austin, Texas
Mid-Size Texas Whiskey DSP: Crossing from Tier 1 into Tier 2

An Austin whiskey distillery has had a breakout year. In November, they distill a large run: 24,000 wine gallons of 80-proof blended whiskey ready for bottling. But they have already removed 92,000 proof gallons YTD. This batch will cross the Tier 1 limit.

Batch PG = 24,000 x 0.80 = 19,200 PG YTD: 92,000 PG Tier 1 remaining: 100,000 – 92,000 = 8,000 PG Tier 1 tax: 8,000 x $2.70 = $21,600 Tier 2 tax: 11,200 x $13.34 = $149,408 Total FET: $171,008 Standard rate: 19,200 x $13.50 = $259,200 CBMA Savings: $88,192

Without the YTD tracker, this distillery might have budgeted $51,840 (19,200 x $2.70) and been blindsided by the $171,008 reality. The tier split is why the YTD input matters.

CBMA Savings (blended tiers)
$88,192.00
📍 Denver, Colorado
Colorado Craft Vodka DSP: Per-Bottle FET Impact on Retail Pricing

A Denver craft vodka distillery needs to understand their FET cost per bottle before setting retail price for a new expression. They produce 1,200 wine gallons of 80-proof vodka. YTD PG removed: 18,000. Bottle size: 750mL. They are solidly in Tier 1.

Batch PG = 1,200 x 0.80 = 960 PG FET (CBMA): 960 x $2.70 = $2,592 FET (Standard): 960 x $13.50 = $12,960 750mL at 80 proof = 0.1585 PG/bottle Bottles: 960 / 0.1585 = ~6,057 bottles FET per bottle (CBMA): $2,592 / 6,057 = $0.43 FET per bottle (standard): $12,960 / 6,057 = $2.14

At a $35 retail price on a $0.43 FET per bottle, FET is just 1.2% of retail. If CBMA expired and they paid $2.14, FET would be 6.1% of retail, forcing either a price increase or margin compression.

FET per 750mL Bottle (CBMA Tier 1)
$0.43 per bottle
Expert Distillery Guidance

Six Critical TTB Compliance Practices That American Craft Distillers Often Learn the Hard Way

1
Always Enter Temperature-Corrected Proof, Not Raw Hydrometer Readings
A hydrometer reading taken at 75 degrees F in your stillhouse is not your legal proof. TTB gauges everything at 60 degrees F using Gauging Manual Table 1. The uncorrected error is small per batch but compounds across a full year of production into a material misstatement on your monthly operations report. If your DSP uses a certified density meter like an Anton Paar, it typically outputs temperature-corrected proof automatically. If you use a glass hydrometer, build the correction step into your production worksheet before entering any number into this calculator or your TTB forms.
2
Track Your Cumulative YTD Proof Gallons Against the Tier 1 Limit Every Month
The 100,000 proof gallon CBMA Tier 1 threshold is not checked automatically by anyone except you. The TTB does not send you a warning when you are approaching the limit. Many craft distilleries that have breakout years in sales unexpectedly cross into Tier 2 mid-year and discover the jump from $2.70 to $13.34 only when they calculate their monthly FET and the number looks wrong. Keep a running YTD proof gallon log, ideally as a column in your monthly operations spreadsheet. Update it every time you make a removal. Enter that number into this calculator before every batch to see your exact tier position before you commit to a removal date.
3
Right-Size Your DSP Bond Coverage Before Your First Large Removal
Every DSP must maintain a surety bond to cover the federal excise tax on spirits from the day they are removed from bond until the tax is paid. The minimum coverage is $1,000 per operation type (distilling, warehousing, processing), meaning most new DSPs start with at least $3,000 in total coverage. But if your quarterly removal plan generates $40,000 in FET liability, a $3,000 bond is dangerously undersized. The TTB can suspend your operations if your bond does not cover your outstanding tax liability. Use the DSP bond estimate in this calculator to understand your approximate 2-week or quarterly exposure and size your bond accordingly. Your surety agent needs the PG removal volume, not just the dollar estimate.
4
Plan Your Annual Removal Schedule to Maximize Tier 1 Usage
If you know your annual production will hit approximately 95,000 to 105,000 proof gallons, the timing of your final removals of the year matters enormously. Spirits that remain in your bonded warehouse on December 31st have not been removed from bond, so they do not count toward your calendar year CBMA total. You have the flexibility to time your December removals to stay under 100,000 PG and push the remainder into January of the following year, restarting your Tier 1 clock. This is not a loophole; it is the ordinary business of managing removal timing, which is a standard practice in licensed DSP operations. Review your projected December YTD position every October.
5
File Your Monthly Operations Report Even in Zero-Activity Months
The TTB Form 5110.40 monthly operations report is required every month your DSP permit is active, even if you produced zero spirits that month. Many new DSPs make the mistake of assuming a blank month requires no filing. It does not. Late or missing reports draw TTB inquiries that take time to resolve and can trigger an audit of surrounding periods. If your DSP is on a quarterly FET payment schedule, remember that you still file a monthly operations report. The quarterly FET filing is separate from the monthly operations report. These are two distinct compliance obligations that many small operators conflate.
6
Understand the Single Taxpayer Group Rule Before Acquiring Another DSP
The CBMA Tier 1 benefit of 100,000 proof gallons applies per taxpayer, not per DSP permit. If a company owns two DSPs, the 100,000 PG limit is shared across both operations combined. TTB Industry Circular 2023-2 makes this explicit: if Company A and Company B are under common ownership, their removals are aggregated for CBMA purposes. If an acquisition or partnership puts two DSPs under common control during the year, the combined entity may owe additional tax on removals already taken at the lower rate, retroactively. Anyone considering acquiring a second DSP or entering a majority-ownership partnership with another distillery should model the CBMA tax impact of the combined operation before closing the deal, and consult a beverage attorney familiar with TTB controlled group rules.
Quick Reference

TTB Proof Gallon Standards, CBMA Benchmarks, and Key Federal Thresholds for US Distillery Operations

Standard or Threshold Value Source and Context
Proof gallon formulaWG x (Proof / 100)27 CFR Part 19 and 26 U.S.C. 5002(a)(11). Core TTB taxable unit.
CBMA Tier 1 rate$2.70 / PG26 U.S.C. 5001(c)(1). First 100,000 PG removed per calendar year by qualifying domestic DSP.
CBMA Tier 2 rate$13.34 / PGNext 22,130,000 PG. Still reduced from standard. Most craft DSPs never reach this tier.
Standard FET rate$13.50 / PGAbove 22,230,000 cumulative PG. Applies to large national brands and imports without CBMA assignment.
Max Tier 1 annual savings$1,080,000100,000 PG x ($13.50 – $2.70) = $10.80 savings per PG. Maximum achievable by a qualifying DSP.
CBMA permanenceMade permanent 2020Pub. L. 116-260 (Consolidated Appropriations Act of 2021). Domestic producers have long-term certainty.
Gauging temperature60 degrees FahrenheitTTB Gauging Manual Table 1. All proof and volume entries in official records corrected to this temperature.
Standard 750mL at 80 proof0.1585 PG(0.75L / 3.78541L per gal) x (80/100). Used for per-bottle FET calculation.
Standard 750mL at 80 proof FET (CBMA)$0.43 per bottle0.1585 PG x $2.70. Actual cost depends on tier position.
Standard 750mL at 80 proof FET (standard)$2.14 per bottle0.1585 PG x $13.50. Pre-CBMA cost or above-threshold cost.
Annual filing threshold (annual)Up to $1,000 FET/yr26 U.S.C. 5061(d)(4). Annual payment and reporting allowed for smallest DSPs.
Quarterly filing threshold$1,001 to $50,000 FET/yrQuarterly payments due by 14th of month following close of quarter.
Semi-monthly filing thresholdAbove $50,000 FET/yrDue 14th and last day of each month. Required above $50,000 projected annual liability.
Minimum DSP bond per operation$1,000 per operation type27 CFR Part 19, Subpart D. Operations bond covers FET value of spirits on bonded premises.
Monthly operations reportForm 5110.40Due by 15th of month following reporting period. Required every month DSP permit is active.
CBMA single taxpayer group rule100,000 PG per controlled groupTTB Industry Circular 2023-2. Multiple DSPs under common ownership share the 100,000 PG Tier 1 limit.
Frequently Asked Questions

Proof Gallon Tax Questions from American Craft Distillers, Answered with TTB-Sourced Data

What exactly is a proof gallon, and why does the TTB use it instead of just liquid gallons? +
A proof gallon is a unit of measurement equal to one liquid US gallon of spirits at exactly 100 proof, which is 50 percent alcohol by volume. The TTB uses it because the taxable substance is the alcohol content, not the total liquid volume. One wine gallon of 80-proof bourbon contains 0.8 proof gallons, while one wine gallon of 160-proof high-wines contains 1.6 proof gallons. Taxing on proof gallons ensures that distillers with higher-proof products pay proportionally more federal excise tax per gallon of physical liquid, keeping the tax tied to the alcohol being released into commerce rather than the water used to dilute it.
Are the CBMA reduced tax rates permanent, or could they expire and go back to $13.50 for everyone? +
The CBMA reduced rates were made permanent by the Consolidated Appropriations Act of 2021, signed into law on December 27, 2020. Unlike the temporary provisions from 2017 to 2020 that required annual reauthorization, the current Tier 1 rate of $2.70 per proof gallon for qualifying domestic producers on the first 100,000 proof gallons is now codified permanently in 26 U.S.C. 5001. US craft distillers can build long-term business models around this tax structure without the uncertainty that existed during the temporary period. Any future change would require an act of Congress, not just an administrative decision.
What happens if my production unexpectedly grows and I cross from Tier 1 into Tier 2 mid-year? +
The transition is automatic based on cumulative proof gallons removed from bond during the calendar year. Once your cumulative removals exceed 100,000 proof gallons, every additional proof gallon removed that year is taxed at the Tier 2 rate of $13.34. You must calculate the split accurately, which this calculator does automatically when you enter your YTD proof gallons already removed. There is no penalty for crossing the tier boundary, but underpaying because you did not notice the tier change creates an underpayment that TTB will catch on audit. If you project you may cross the threshold before year end, factor the higher rate into your pricing and cash flow plan for the remainder of the year.
When exactly is federal excise tax owed on distilled spirits? +
FET on distilled spirits is assessed when spirits are removed from bond, meaning when they leave the bonded DSP premises for sale, consumption, or transfer to a distributor. Spirits that remain on bonded premises, in barrels in a bonded warehouse or in tanks awaiting bottling, are not subject to FET until they are removed. This is why distilleries with large aging programs can carry significant inventory on their books without paying FET on all of it upfront. You pay FET on the specific volume removed in each removal transaction, not on all spirits in your facility at once. This is also why accurate gauging at the point of removal is so critical for TTB compliance.
Can I pay federal excise tax before I remove spirits from bond? +
Yes. You can elect to pay FET before or on the same day as removal from bond, which is sometimes called a taxpaid removal. This avoids the need for a large withdrawal bond because the tax is covered at the time of removal rather than deferred. Many smaller distilleries choose this approach to simplify their bond requirements, particularly early in operations when cash flow allows it and the bond overhead feels disproportionate. However, most growing distilleries eventually find it more cash-flow-efficient to use bond coverage and pay on the standard semi-monthly or quarterly schedule, which allows a brief period of float between removal and payment. The decision depends on your production volume, cash position, and bond cost.
How do I calculate the proof gallons in a mixed-proof batch where I blended spirits of different proofs? +
For a batch where you blend spirits of different proofs into a single vessel before gauging, the TTB requires you to determine the actual proof of the blend at the time of removal by gauging the combined mixture at 60 degrees F. You then apply the standard formula: proof gallons equals wine gallons of the blend times (blended proof divided by 100). You do not calculate PG for each component separately and add them, unless you are removing each component separately from bond as separate transactions. The TTB expects you to gauge the actual product being removed, not a theoretical blend of components. Always gauge after blending, not before, when calculating PG for the removal transaction.
What is the difference between a withdrawal bond and an operations bond for a DSP? +
An operations bond covers the FET value of spirits present on your bonded DSP premises, protecting against liability if the spirits are lost, destroyed, or otherwise unaccounted for. A withdrawal bond covers the FET on spirits from the moment they leave the bonded premises until you pay the tax to the TTB. Most new distilleries need both, because spirits in bond accumulate tax liability even before removal. The minimum for each type is typically $1,000 per operation (distilling, warehousing, processing). For withdrawal coverage, the TTB recommends estimating your maximum removals in a two-week period (semi-monthly filers) or a quarterly period and multiplying by $13.50 to determine the appropriate coverage level. This calculator outputs an estimated two-week withdrawal bond exposure based on your batch size.
Do spirits I distill but transfer to another licensed DSP still count against my CBMA Tier 1 limit? +
It depends on whether tax is paid at the time of transfer and who holds the DSP permit. Bulk spirits transferred between bonded DSPs without tax payment (an in-bond transfer) do not count against the transferring DSP’s CBMA limit because the removal from bond has not occurred. The CBMA limit tracks taxable removals from bond, not production volume. However, if you produce spirits as a contract distiller for another party that removes them from your DSP under their own account, the situation becomes more complex and depends on who is considered the producer for CBMA purposes. The TTB has issued guidance on this in the context of alternating proprietorships. Consult a TTB-experienced attorney before structuring any contract distilling arrangement involving CBMA planning.
How does FET affect the pricing of spirits sold to distributors versus direct-to-consumer sales? +
FET is assessed at the point of removal from the bonded DSP, regardless of the downstream sale channel. Whether you sell to a wholesale distributor, retail customer, or through your tasting room, the FET obligation arises when you pull the product off bond and bottle it or transfer it in bulk. For pricing purposes, the FET per bottle at the CBMA rate (about $0.43 for a 750mL at 80 proof) is your direct production cost component attributable to federal tax. State excise taxes, which vary widely, are separate and layered on top. Most distilleries price to the distributor at a level that covers production cost including FET, state tax, COGS, and desired margin, then the distributor and retailer mark up from there. The per-bottle FET output in this calculator helps you model exactly what federal tax cost looks like at each bottle size and proof level before you set your distributor price.
Can I use this calculator to verify the FET figures my accountant or bookkeeper calculated? +
Yes, and this is one of the most practical uses of the tool. Enter the same wine gallons, proof, and YTD PG your accountant used, and compare the output. If there is a discrepancy, the most common causes are: the accountant used an uncorrected proof reading instead of the 60-degree-F gauged proof, the YTD PG figure was not current, or the tier split was not applied correctly for batches that cross the 100,000 PG boundary. This calculator uses the exact TTB formulas with Big.js decimal precision, so any difference from your accountant’s figure warrants investigation before you file. The output is not TTB-certified, so always reconcile to your actual gauging records and consult your accountant or compliance consultant before filing.
What records does the TTB require me to keep for proof gallon calculations? +
Under 27 CFR Part 19, Subpart R, all DSPs must maintain production records that include the quantity of spirits in both wine gallons and proof gallons for every production run. This includes the date of production, the source materials used, the temperature-corrected proof at 60 degrees F from a certified hydrometer or density meter, the wine gallon volume from a calibrated tank gauge, and the calculated proof gallons. Storage records must similarly track inventory movements in both units. Your records must be available for TTB inspection at all times and retained for a minimum of three years after the period they cover. Most compliance-conscious DSPs keep seven years of records to match IRS audit statute requirements. Electronic records are acceptable as long as they can be accessed and printed on demand during a TTB inspection.
Is there a difference in how FET applies to spirits redistilled from purchased bulk neutral spirit versus spirits I distill from original source materials? +
Yes, and this distinction matters for your CBMA eligibility. The CBMA Tier 1 benefit on the first 100,000 proof gallons is specifically available to DSPs that distill spirits or perform an eligible processing activity. For spirits you purchase in bulk and redistill or process (such as blending, diluting, or bottling purchased neutral spirit into vodka), you may still qualify for the reduced rate if you meet the definition of processor under the CBMA rules. However, DSPs that exclusively bottle purchased spirits without any distillation activity face specific limitations. The TTB has provided detailed guidance on this distinction in the CBMA FAQ on TTB.gov. If your operation involves significant purchased bulk spirit, review TTB’s processor-specific CBMA rules carefully before assuming Tier 1 eligibility on all products.
How do I calculate proof gallons for spirits measured in liters or metric units? +
The TTB uses US gallons and proof gallons for all reporting, so metric measurements must be converted first. The TTB’s official conversion factor for distilled spirits is: 1 proof liter equals 0.264172 proof gallons. To convert metric quantities, first determine the volume in liters and the ABV percentage. Multiply liters by ABV divided by 50 to get proof liters (since proof equals ABV times 2), then multiply by 0.264172 to get proof gallons. Alternatively, convert liters to US gallons first (1 liter equals 0.264172 US gallons) and then apply the standard PG formula. The TTB’s CBMA import resources page provides these conversion factors for importers who receive foreign-produced spirits measured in metric units.
What happens if I overpay my federal excise tax for a period? +
If you overpay your FET for any period, you can claim a credit or refund from the TTB. For semi-monthly filers, an overpayment in one period can typically be credited against the next period’s liability on the same return. For quarterly filers, overpayments are similarly carried forward or can be refunded upon request. The TTB does not automatically issue refunds; you must claim them. The most common cause of overpayment is failing to apply the CBMA reduced rate correctly, particularly using the Tier 2 rate of $13.34 when Tier 1 at $2.70 still applied, or using the standard rate of $13.50 when CBMA rates were applicable. Overpayments of $100 or more are generally worth pursuing through the TTB’s refund claim process. Smaller amounts are sometimes just credited forward given the administrative cost.
Does the proof gallon tax rate change for spirits that are aged versus unaged? +
No. The federal excise tax rate does not vary based on whether spirits are aged or unaged at the time of removal from bond. A new make bourbon spirit removed from bond immediately after distillation pays the same FET rate as the same spirit after four years of barrel aging. The rate applies to the proof gallons removed, not the age or quality of the product. What does change with aging is the proof gallon count itself, because spirits gain or lose volume during barrel aging (angel’s share evaporates, and in humid rickhouses, spirits sometimes gain volume slightly from atmospheric moisture absorption). The proof also typically increases in dry climates and decreases in humid ones. When aged spirits are eventually removed from bond, you gauge the actual barrel contents at 60 degrees F to determine the current wine gallons and proof, then calculate PG on those actual figures, not on the original fill numbers.
How do state excise taxes interact with the federal TTB proof gallon tax? +
State excise taxes on distilled spirits are entirely separate from federal TTB taxes and are administered by each state’s alcohol beverage control (ABC) authority. They are calculated and assessed independently, often using different units of measurement, and are typically paid to the state, not to the TTB. State rates vary enormously. States like Wyoming and Missouri have very low excise taxes on spirits, while states like Washington operate as control states where spirits are sold through state-run stores at prices that effectively embed a large state markup. Some states assess their tax per gallon of total liquid, others use a percentage of revenue, and some use their own proof-equivalent unit. Your total effective tax burden per bottle includes both the federal FET and your state’s excise tax or markup. This calculator covers the federal TTB FET only. For state rates, check your state ABC authority’s fee schedule.