LOUISVILLE, Ky. — Kentucky’s bourbon industry continues to flourish. There are 11.4 million barrels in the state, and each barrel is taxed.

Many county governments rely on this income to help fund schools, Emergency Medical Services (EMS) and fire departments, but distillers say the tax is a heavy burden.

What You Need To Know

  • Kentucky’s state lawmakers are working to find a solution as the bourbon industry continues to flourish

  • There are 11.4 million barrels in the state and each barrel is taxed

  • Many county governments  rely on this income to help fund schools, EMS services and fire departments

  • Distillers say the tax is a heavy burden

Lawmakers are working to find a solution to the state’s Bourbon Barrel Tax.

“We average around 80 to 90 runs a month,” said fire chief Erik Butler with the Southeast Bullitt Fire Department.

He’s concerned about the ongoing debate surrounding the state’s bourbon barrel tax.

“The income that we get off the barrel tax is 40% of what we take in between Jim Beam and Four Roses,” Butler said.

He says that 40% is roughly $350,000. If they lose that, he said, the fire department could have to shut down.

“There could possibly be no more Southeast Bullitt. We would lose our paid people, go to volunteers and you know, right now, volunteers are hard to get, so it could possibly shut our doors for good. And then, you know, my taxpayers won’t have fire protection,” Butler said.

He and communities across the state are fighting to keep the tax. Henry County Judge-Executive John Logan Brent said they plan budgets around those dollars to help develop their county. 

“It’s really hard to think about how we’re going to grow this county without it. These distilleries are here. We’re glad they’re here, but they’re going to need services, too,” Brent said. “They’re gonna need EMS and fire protection. They want skilled workers, educated workers so our their school system. They need county government to provide the services that we provide.”

Butler said that helps sustain their fire department.

“We don’t get into firefighting for the money. You know, we get into because we care about people, we want to protect people, we want to help people,” Butler said. “And then once that money goes away, then you know, how are we supposed to do that?”

Eliminating the Bourbon Barrel Tax is not the ideal solution for him. “If they get rid of that, to me that’s not being a good neighbor,” Butler said.

The Kentucky Distillers’ Association wants to remove the bourbon barrel tax. Kentucky Distillers Association (KDA) president Eric Gregory said Kentucky has fallen behind over the years in the number of distilleries, compared to other states that are attracting distilleries at a far greater pace.

Gregory said one of the primary reasons is the barrel tax is a barrier to entry for new distilleries trying to establish themselves. He said this is the fourth year in a row Kentucky filled over 2 million barrels, making it the most paid in barrel taxes.

“With the expansion over the past 10 years, we’ve gone from in 2014, about $10 or $12 million in Barrel taxes, to this year, the distilleries are paying $40 million in Barrel taxes. So it is skyrocketed as the industry has grown,” Gregory said,

Earlier this year, the Kentucky General Assembly launched the Bourbon Barrel Tax Task Force. They’re aiming to find facts and restructure the state’s tax code.