LEXINGTON, Ky. (FOX 56) – Spirits are high in the bourbon industry. Rick houses across the commonwealth are filled to the brim. The state has reached a record number of bourbon barrels in storage. Over 11 million barrels of bourbon or 12 million when you include the other aging spirits.

The Kentucky Distillers Association (KDA) said it’s a call for celebration. However, industry leaders said the taxes set for bourbon are ruining the party.

The state’s signature industry has marked its fourth year in a row of filling more than two million bourbon barrels. The story of bourbon started 200 years ago and the staple here in Kentucky is still making headlines.

“We have proven that Kentucky bourbon is a really good investment just over the last 10 years we have doubled our employees,” President of KDA Eric Gregory said.

While barrel records are typically a cause for uncorking a bottle and celebrating the impact of aging barrel taxes are more a cause of concern.

“We are the birthplace of Bourbon, it is our one true authentic American spirit, but it does come with some mixed feelings and the fact that we still have a big tax bill to pay as distillers,” Gregory said.
Kentucky remains the only place in the world that taxes the aging barrels of spirits Eric Gregory president of the Kentucky distillers said it is a discriminatory tax on bourbon because it takes so long to age.

“That is the blessing and a curse of Kentucky bourbon, you can’t just age it overnight like you can Vodka or gin, or rum, or some of the other neutral spirits. So there are 2300 distilleries now all across America, and less than one hundred of those are in Kentucky,” Gregory said.

This begs the question from the association, as to why distillers are not located in Kentucky, Gregory said feedback from the distillers said it’s because of the sales tax.

“We use to have almost 50% of distillery jobs in the country, we are now about 30%, and we got distilleries in 40 counties- which is an all-time high but that means there are 80 counties in Kentucky that could be taking part in the bourbon boom,” Gregory said.

Eric said the Kentucky distillers also pay more than $1.8 billion in federal alcohol taxes. He said that is by far the most among any state. Kentucky ranked 29th in the country in the rate of adding new distilleries.