HR 4613119th CongressIn Committee

Bubble Tax Modernization Act of 2025

Introduced: Jul 22, 2025

Economy & Taxes

Standard Summary

Comprehensive overview in 1-2 paragraphs

The Bubble Tax Modernization Act of 2025 proposes to change how certain beverages—specifically mead and low alcohol by volume (ABV) wines—are taxed under the wine excise tax provisions. By amending the Internal Revenue Code, the bill eliminates a separate or differential tax treatment between mead and low-ABV wines and aligns mead with the tax rules for low-ABV wines when it qualifies as such. It defines what counts as “low alcohol by volume wine,” including limits on alcohol content and carbon dioxide (CO2) levels, and it applies to wines removed from production after December 31, 2025. The Secretary would have authority to set tolerances for CO2 to accommodate good commercial practice. In short, the bill aims to unify tax treatment for mead and certain wines by classifying qualifying mead as wine for tax purposes, potentially changing how mead is taxed and regulated at the federal level.

Key Points

1Removes differentiation between mead and low-ABV wine for purposes of the wine excise tax (as defined in Section 5041 of the Internal Revenue Code).
2Redefines “low alcohol by volume wine” to mean still wines containing not more than 16% ABV, with a specific definition that includes CO2 content and an ABV threshold (less than 8.5% ABV, plus a CO2 limit; tolerances may be set by the Secretary as needed for good commercial practice).
3Applies to wine removed after December 31, 2025 (prospective effective date).
4The Secretary is authorized to establish tolerances for CO2 content to accommodate normal commercial variation.
5Short title: Bubble Tax Modernization Act of 2025.

Impact Areas

Primary group/area affected:- Mead producers and sellers, as well as craft beverage makers who produce mead, who could be taxed under the same framework as certain wines if their product meets the defined criteria.- Tax compliance and accounting within the wine and mead industries, including labeling and reporting requirements.Secondary group/area affected:- Wine producers with low-ABV products, distributors, and retailers who may see changes in classification and related tax treatment.- Regulatory agencies administering the wine excise tax and industry guidance.Additional impacts:- Potential changes in federal revenue from wine/mead excise taxes, contingent on how many meads qualify under the new definition.- Market dynamics and pricing for products that fall under the low-ABV wine category or near its thresholds.- Administrative and compliance considerations as Treasury/IRS implements new definitions and tolerances.

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