As you continue to grow your brewery or distillery, several state and federal tax incentives are available to help you offset the cost of investments like machinery upgrades, facility improvements, and new product development. Taking advantage of available credits and deductions can significantly improve your cash flow and free up capital for future growth. Here are three tax-saving strategies you should consider as an alcoholic beverage producer in New York State.

1. New York State Investment Tax Credit

The New York State Investment Tax Credit (ITC) can provide valuable tax savings for New York businesses that invest in equipment, machinery, buildings, and other qualifying property used directly in the production of goods—including alcoholic beverages. Breweries, distilleries, and cideries may be eligible for the credit when they place qualifying production assets into service during the tax year. Eligible property may include brewing or distilling equipment, fermentation and storage systems, production machinery, and certain facility improvements used directly in the production process.

2. Qualified Production Property Deductions

The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, both restored 100% bonus depreciation and expanded it to include a new category of assets known as qualified production property (QPP). Eligible businesses can now immediately deduct 100% of the cost of qualifying production facilities rather than depreciating those costs over the traditional 39-year period for nonresidential real property. For breweries, distilleries, and cideries constructing new production facilities or expanding existing operations, the resulting tax savings may significantly improve cash flow.

To be considered production property (QPP), an asset must meet several criteria, the most important of which is that it must be used as an integral part of a “qualified production activity.” A qualified production activity is defined as the manufacturing, production, or refining of a qualified product resulting in a “substantial transformation” of the property comprising the product. The QPP deduction generally applies to new construction, but in some cases may apply to acquired qualified production property.

3. Research and Development Tax Benefits

The OBBBA has also made significant changes to the treatment of domestic research and development (R&D) expenditures. Previously, businesses were required to amortize domestic R&D costs over five years. Under the new law, those expenditures may once again be deducted in full during the year they are incurred. For breweries, distilleries, and cideries, qualifying research activities include developing new flavor varieties, testing alternative ingredients, refining fermentation techniques, improving production efficiency, and experimenting with new formulations.

Planning Ahead with RBT

Whether you are purchasing new brewing or distilling equipment, expanding a production facility, or investing in product development, the current tax landscape offers several opportunities to reduce tax liability and improve cash flow. Reviewing your capital expenditure plans with your RBT accountant can help you maximize available tax benefits while also ensuring compliance with applicable requirements. Contact us today to work with our specialized accounting team and find out how we can be Remarkably Better Together.