What Beer Is, According to the United States Government

Beer, considered as a beverage, is roughly ten thousand years old. Beer, considered as a federal regulatory category, is considerably younger and somewhat more confused, having been defined twice by two different statutes for two different reasons, with the result that a bottle of sake fermenting quietly in California is, as far as the Treasury is concerned, beer.

This is the kind of thing that happens when a country bans alcohol, unbans it, and then has to write the definitions in a hurry.

Two Definitions, One Beverage

The federal government defines beer in two places, and the definitions do not entirely agree.

The first definition lives in the Internal Revenue Code at 26 USC section 5052, which exists for the purpose of taxing things. The IRC says beer is "beer, ale, porter, stout, and other similar fermented beverages (including saké or similar products) of any name or description containing one-half of 1 percent or more of alcohol by volume, brewed or produced from malt, wholly or in part, or from any substitute therefor." The phrase "or in part, or from any substitute therefor" is doing quite a lot of work. It is the reason a beverage made largely from rice, with only a token nod toward malted barley, can still be taxed as beer.

The second definition lives in the Federal Alcohol Administration Act at 27 USC section 211, which exists for the purpose of regulating labels, advertising, and trade practices. The FAA Act calls the category "malt beverage" rather than beer, and it is fussier. A malt beverage, per 27 USC section 211, must be brewed from malted barley specifically, with hops or hop products, and may include other agricultural products as adjuncts. Crucially, the FAA Act definition does not cover beverages made entirely from substitutes for malt. Sake, which contains no barley malt, is beer under the IRC and is not a malt beverage under the FAA Act.

The practical consequence is that the same liquid can be a taxable beer at the brewery gate and not a regulated malt beverage when it reaches the label-approval office. Sake brewers, hard seltzer producers using sugar-based fermentation, and the makers of certain gluten-free products all live in this gap. The Alcohol and Tobacco Tax and Trade Bureau, known as the TTB, administers both regimes and has written considerable guidance on which rules apply when. The agency's beer page collects the regulatory tree in one place.

The dual definition is not an oversight. It is a fossil. Tax law and trade-practice law were written in different decades, by different congresses, with different anxieties.

What Goes In

The traditional ingredient list for beer — water, malted barley, hops, yeast — is sometimes presented as a legal requirement. It is not, at the federal level. The Reinheitsgebot is a German statute from 1516 and has no force in the United States.

What 27 CFR Part 25, the regulation governing beer at federal breweries, actually does is define beer broadly and then permit a long list of adjuncts. Per 27 CFR section 25.11, beer is "beer, ale, porter, stout, and other similar fermented beverages... brewed or produced from malt, wholly or in part, or from any substitute for malt." Substitutes named in Part 25 include rice, grain of any kind, bran, glucose, sugar, and molasses. Brewers may also use fruit, honey, herbs, spices, and a long miscellany of flavoring materials, subject to formula approval.

Yeast, oddly, is not specifically required by name in the federal definition, presumably because a beverage that has not been fermented is not a beverage anyone would call beer. Fermentation is implicit. The relevant biology — primarily Saccharomyces cerevisiae and Saccharomyces pastorianus, the latter being a hybrid that performs lager fermentation at lower temperatures — is well documented in the brewing science literature indexed by NCBI PubMed Central.

Hops are required for malt beverages under the FAA Act but, again, not strictly required for beer under the IRC. A beverage with no hops can be taxed as beer and still fail to qualify as a malt beverage for labeling purposes. This is the sort of thing that keeps regulatory attorneys employed.

The Boundary with Other Fermented Drinks

The line between beer and its cousins is drawn by ingredients and process, not by alcohol level or color or how the bottle looks on a shelf.

Wine, regulated under separate provisions of the IRC, is fermented from fruit — typically grapes, but also other fruits, and including products labeled as fruit wines. Hard cider is a subcategory of wine, fermented from apples or pears, with its own tax treatment. Mead is wine made from honey. Sake, made from rice, is wine in Japan and beer in the United States, a distinction that has more to do with how the U.S. tax code was drafted than with any quality of the beverage itself.

Hard seltzer is the genuinely interesting case. A seltzer fermented from malted barley is a beer. A seltzer fermented from cane sugar is, depending on its other characteristics, either a beer (under the IRC) or something else entirely. The TTB has issued multiple rulings on flavored malt beverages and sugar-based seltzers, and the classification can shift based on what proportion of the alcohol comes from malt fermentation versus added flavors. A producer who guesses wrong faces a different tax rate and a different label regime.

Non-alcoholic beer is its own oddity. Federal law treats beverages below 0.5 percent alcohol by volume as outside the IRC beer definition entirely — not taxed as beer, not regulated as a malt beverage in the same way, but still subject to TTB oversight on labeling. The 0.5 percent threshold is an artifact of Prohibition-era drafting and has stuck around because nobody has had a compelling reason to move it.

Taxes, in Broad Strokes

Federal excise tax on beer is imposed under 26 USC section 5051. The structure has two bands. Domestic brewers producing not more than 2 million barrels per year pay a reduced rate on their first 60,000 barrels and a standard rate on the remainder. Larger brewers and importers pay the standard rate throughout. The Craft Beverage Modernization Act, originally passed as part of the 2017 tax law and made permanent in late 2020, set the small-brewer reduced rate at 3.50 dollars per barrel on the first 60,000 barrels for qualifying domestic producers, with the standard rate at 16 dollars per barrel up to 6 million barrels and 18 dollars per barrel above that. The current statutory text is at 26 USC section 5051.

A barrel, for tax purposes, is 31 gallons. This is not the same as a brewer's barrel in casual usage and is also not the same as the British barrel. The number 31 is, like much else in this body of law, inherited.

State excise taxes sit on top of the federal rate and vary by an order of magnitude. Wyoming has historically taxed beer at around two cents per gallon; Tennessee, depending on how the wholesale tax is counted, lands near the top of the table. The Beer Institute publishes annual summaries in its Brewers Almanac.

What the Label Has to Say

A bottle of beer crossing a state line carries a surprising amount of mandated text. 27 CFR Part 7 governs the labeling of malt beverages and requires, among other things, a brand name, a class and type designation (lager, ale, porter, and so on), the name and address of the bottler or importer, the net contents, and — for malt beverages — alcohol content disclosed in the manner prescribed.

The alcohol-by-volume rule is its own small saga. For decades, federal law actually prohibited ABV statements on beer labels, on the theory that brewers might compete on potency. That prohibition was struck down by the Supreme Court in Rubin v. Coors Brewing Co. in 1995. Under current 27 CFR Part 7, ABV disclosure on malt beverage labels is permitted and, in some states, required. Tolerance ranges apply.

The Government Warning Statement, mandated by 27 CFR Part 16, is the small-print paragraph that appears on every alcoholic beverage container sold in the United States. The exact wording is prescribed by regulation and warns about pregnancy and impaired operation of machinery. The statement was added in 1989 under the Alcoholic Beverage Labeling Act and has not changed. The National Institute on Alcohol Abuse and Alcoholism publishes the underlying public-health research that informs the language.

Container origin — country of origin for imports, state of bottling for domestic — is also required, along with the standard of fill, which dictates permissible container sizes.

How It Got This Way

The reason beer is defined twice traces directly to the period between 1919 and 1933.

The 18th Amendment, ratified in January 1919, prohibited the manufacture, sale, and transportation of intoxicating liquors. The National Prohibition Act, called the Volstead Act, set the threshold for "intoxicating" at 0.5 percent alcohol by volume, which is the same number that still defines non-alcoholic beer today. The National Archives holds the original ratification records and considerable contextual material.

Prohibition ended with the 21st Amendment, ratified in December 1933, which is the only constitutional amendment to repeal another. The 21st Amendment also explicitly preserved state authority over alcohol, which is why the United States has fifty different state alcohol regimes layered on top of the federal one.

In 1935, Congress passed the Federal Alcohol Administration Act, codified beginning at 27 USC section 201. The FAA Act created the agency that eventually became the TTB and established the labeling, advertising, and trade-practice rules that govern alcoholic beverages in interstate commerce. The IRC tax provisions, meanwhile, descended from earlier revenue statutes and were modernized separately. The two regimes were never harmonized into a single definition because they serve different purposes and were drafted decades apart.

The Edge Cases, Stated Plainly

Federal beer law contains several edges that are worth naming directly.

Sake, fermented from rice, is taxed as beer under the IRC and is not a malt beverage under the FAA Act. A sake producer in the United States files brewer's reports under 27 CFR Part 25 but does not necessarily seek a Certificate of Label Approval as a malt beverage.

Non-alcoholic beer, below 0.5 percent ABV, falls outside the federal beer tax entirely but is still produced at facilities operating as breweries.

A beverage containing both malted barley and grape juice, or malt and wine, can fall on either side of the beer/wine line depending on the proportion and the source of the alcohol. The TTB resolves these by formula review on a product-by-product basis.

A Closing Observation

Beer, federally, is whatever the tax code and the labeling code together say it is, and the two codes do not fully agree, and that disagreement is older than anyone currently working at the TTB. The category is durable not because the definition is elegant but because brewers, regulators, and drinkers have collectively decided to treat the messy bits as features rather than bugs. The definition is a pile of compromises stacked on top of a constitutional repeal stacked on top of a tax statute drafted during the Civil War. It works, mostly. For the formal study of beer style and service, programs such as the Beer Judge Certification Program, the Master Brewers Association of the Americas, the Institute of Brewing & Distilling, and the Cicerone Certification Program® each occupy a different niche; readers preparing for the Certified Cicerone® exam or the BJCP exam are working with the same beverage that 27 CFR section 25.11 defines, but with rather more attention to flavor and rather less to barrel-equivalent gallons.

Further reading

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Beer vs Malt Beverage: Why Federal Law Defines It Twice What Fermentation Actually Does A Short History of Beer: Mesopotamia to the Middle Ages The Modern Beer Industry: From Industrial Pilsner to Craft

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