Brews to Barns Act of 2026
- Sponsor
- Rep. Kelly, Mike [R-PA-16]
- Committees
- Ways and Means Committee (primary)
- Last action
- Oct 22, 2026
Bottom line
This bill incentivizes brewers to divert spent grain from waste streams to local agricultural uses by offering a federal excise tax credit of up to $35,000 annually.
What it actually does
This bill amends the Internal Revenue Code of 1986 to establish a new credit against the federal excise tax on beer for brewers. The credit is specifically for brewers who donate spent grain byproduct for local agricultural use, defining 'local' as within 100 miles and 'agricultural use' to include composting, soil amendment, mushroom cultivation, and animal feed.
Proponents argue
Supporters argue this bill promotes environmental sustainability by reducing waste, supports local agriculture by providing a valuable resource, and offers a modest financial incentive to small businesses (brewers). They contend it fosters a circular economy by transforming a byproduct into a beneficial input for local food systems.
Opponents contend
Critics might argue that this creates a new targeted tax credit that adds complexity to the tax code, potentially leading to administrative burdens for both brewers and the Internal Revenue Service. Some may question whether the relatively small credit will be effective enough to significantly alter waste management practices or if it could lead to unintended market distortions.
The bill is very short and clearly written, making it highly accessible for any reader to understand its core provisions quickly.
Section 2(a), amending Subpart D of part 1 of subchapter A of chapter 51 of the Internal Revenue Code of 1986 by adding new section 5057.
Establishment of Brewer Spent Grain Credit
This provision creates a new federal tax credit for brewers. The credit allows brewers to reduce their federal excise tax liability on beer by $0.08 for every dry weight pound of spent grain byproduct they donate to an unrelated person for local agricultural use. The credit is capped at the total tax imposed on beer removed by the brewer during a given period, and an overall annual maximum of $35,000.
Supporters argue
Supporters argue this credit provides a practical incentive for brewers to engage in sustainable practices, reducing waste and supporting local agricultural economies. They highlight it as a 'win-win' for businesses, farmers, and the environment, fostering community and resourcefulness.
Critics contend
Critics might argue that while the intent is positive, the credit's relatively small size ($0.08 per pound, maximum $35,000) may not be a strong enough incentive to significantly alter behavior for larger brewers, and it adds complexity to the tax code for a niche issue.
Tradeoffs
The bill balances the desire to incentivize sustainable waste management and support local agriculture with the potential for increased administrative burden for the IRS and brewers, and the cost to federal revenue through tax expenditures.
Defines 'local' agricultural use as any use not more than 100 miles from the location where the beer brewing process occurred.
Section 5057(c)(1)(B)
Why it matters:It is standard legislative practice to define terms precisely within a dedicated section to ensure clear and consistent application of the law.
Case for: Supporters argue this ensures the environmental and economic benefits remain localized, fostering community ties, reducing transportation emissions, and directly benefiting nearby agricultural operations.
Case against: Critics might contend that a strict 100-mile limit could arbitrarily exclude beneficial agricultural partnerships just outside the boundary, potentially limiting the credit's overall effectiveness and flexibility for brewers in rural areas.
Estimated impact: Directly impacts the eligibility of spent grain donations, potentially limiting the number of qualifying transactions and the total credit claimed by brewers based on their geographic location and available agricultural partners.
Specifies that the number of pounds of spent grain byproduct for credit calculation must be determined based on the dry weight of all grain ingredients used in the beer brewing process.
Section 5057(c)(2)(B)
Why it matters:It is standard legislative practice to provide precise measurement criteria for tax credits to ensure fair, consistent, and verifiable application, preventing disputes over moisture content or other variables.
Case for: Supporters argue this provides a clear and consistent metric for calculating the credit, preventing disputes over moisture content and ensuring the credit is based on the actual material value of the grain.
Case against: Critics might point out that requiring brewers to track 'dry weight pounds' of *ingredients* rather than the *byproduct* itself could introduce additional administrative complexity and record-keeping burdens, especially for smaller operations.
Estimated impact: Crucial for determining the exact credit amount a brewer can claim, directly affecting the financial benefit received from the program.
Mandates that brewers claiming the credit keep specific records, including dry grain weight, receipts documenting contributions, and certifications of end-use and location from persons to whom spent grains were contributed.
Section 5057(c)(3)
Why it matters:It is standard practice to include compliance and enforcement mechanisms within the legislative text for tax provisions to ensure accountability and prevent fraud.
Case for: Proponents argue these requirements are essential for preventing fraud, ensuring accountability, and allowing the IRS to verify claims, thereby maintaining the integrity and effectiveness of the tax credit program.
Case against: Opponents might argue that these detailed record-keeping requirements, particularly obtaining certifications from agricultural users, could impose significant administrative burdens on small brewers and local farmers, potentially deterring participation.
Estimated impact: Increases compliance costs for brewers and requires cooperation from agricultural recipients, potentially affecting the net financial benefit of the credit for participants.