According to the Legislative Budget Board (LBB) , the fiscal implications of HB 3993 indicate a negative impact of $1,780,000 to the General Revenue Related Funds over the biennium ending August 31, 2027. The estimated annual loss is $890,000 from fiscal years 2026 to 2030, totaling $4,450,000 over five years.

The primary reason for this revenue loss is the bill’s adjustment to the alcohol by volume (ABV) threshold for vinous liquor taxation. Under current law, vinous liquor with 14 percent or less ABV is taxed at 20.4 cents per gallon, while those with more than 14 percent ABV are taxed at 40.8 cents per gallon. HB 3993 raises the lower tax rate threshold to 16 percent ABV, meaning that some vinous liquors previously taxed at the higher rate will now be taxed at the lower rate.

The methodology used to calculate the revenue impact assumes that approximately half of the vinous liquor currently taxed at 40.8 cents per gallon would shift to the 20.4 cents per gallon category if the bill becomes law. This estimate is based on historical data from the Alcohol and Tobacco Tax and Trade Bureau (TTB) regarding changes in federal tax classification from 14 percent to 16 percent ABV. The analysis uses wine production and taxable withdrawal data from 2017 and 2018, along with recent excise tax data from the Texas Alcoholic Beverage Commission (TABC), and projects forward based on the Comptroller’s 2026-27 Biennial Revenue Estimate.

There is no anticipated fiscal impact on local government units, as the projected revenue loss solely affects state-level funds. The bill's financial effect is primarily attributed to the reclassification of some wine products into a lower tax category, reflecting a decrease in tax revenue without changing consumption patterns.

The overall vote recommendation for HB 3993 is "Yes". The bill addresses an outdated aspect of the Alcoholic Beverage Code by adjusting the alcohol content threshold for taxing vinous liquor, bringing Texas regulations in line with federal standards. By raising the tax threshold from 14 percent ABV to 16 percent ABV, HB 3993 ensures that domestically produced red wines, which naturally fall into this ABV range due to changing climate conditions and production practices, are not unfairly taxed at a higher rate.

One of the primary strengths of the bill is that it corrects an unintended disparity in the current tax system. Under existing law, many red table wines that are federally classified as table wines (up to 16 percent ABV) are taxed at a higher rate in Texas simply because the state’s outdated threshold is set at 14 percent ABV. This inconsistency places a disproportionate financial burden on domestic wine producers, especially those in Texas, where natural alcohol content in wines has increased. By aligning state regulations with federal definitions, the bill reduces unnecessary costs for producers and helps maintain competitive fairness in the wine market.

Additionally, the bill supports the principle of limited government by reducing an excessive tax burden that resulted from outdated regulations. It acknowledges the evolving landscape of wine production and respects the need for tax policies that reflect current industry practices. Although the bill results in a projected annual revenue loss of $890,000 to the General Revenue Fund, the long-term economic benefits—such as supporting local wineries and reducing regulatory burdens—outweigh the fiscal impact. Moreover, there is no anticipated effect on local government revenues.

In summary, HB 3993 is a pragmatic and fair policy adjustment that aligns state tax practices with modern wine production realities. By updating the tax classification, the bill supports economic growth, reduces regulatory complexity, and promotes fair treatment for Texas winemakers, justifying a positive vote recommendation. Texas Policy Research recommends that lawmakers vote YES on HB 3993.

• Individual Liberty: HB 3993 indirectly supports individual liberty by reducing the tax burden on consumers and producers of vinous liquor, particularly red wines with alcohol by volume (ABV) between 14 and 16 percent. Currently, these wines are taxed at a higher rate under Texas law, despite being classified as table wines under federal regulations. By aligning state law with federal standards, the bill ensures that consumers are not unfairly penalized for purchasing products that naturally fall within the 16 percent ABV range. This adjustment upholds consumer freedom by making domestic wines more affordable and accessible.
• Personal Responsibility: The bill upholds the principle of personal responsibility by creating a more consistent and predictable tax structure for wine producers. Wineries are responsible for calculating and paying excise taxes based on the alcohol content of their products. By clarifying that wines with up to 16 percent ABV are taxed at the lower rate, HB 3993 reduces the risk of misclassification and errors in tax filing. This transparency empowers producers to accurately assess their tax obligations and reinforces their duty to comply with the law.
• Free Enterprise: HB 3993 strongly supports free enterprise by reducing the tax disparity that disproportionately affects domestic wine producers, particularly those in Texas. Due to evolving wine production methods and changing climate conditions, many red wines naturally exceed the outdated 14 percent ABV threshold. The bill’s adjustment allows these wines to be taxed at the lower rate, reducing production costs and fostering economic competitiveness. Lowering the tax burden on popular wine varieties promotes market growth, supports local wineries, and benefits the state’s wine industry as a whole.
• Private Property Rights: Although the bill does not directly address private property rights, it indirectly supports the economic viability of privately owned wineries. By alleviating the tax burden on vinous liquor with higher ABV levels, HB 3993 helps protect the economic interests of vineyard owners and wine producers. This reduction in regulatory cost burden enhances their ability to profit from their property and reinvest in production.
• Limited Government: HB 3993 aligns with the principle of limited government by updating outdated regulations that impose an excessive tax burden on certain wines. The current tax rate structure, based on an arbitrary ABV threshold, results in over-taxation due to changes in wine production practices. By modernizing the tax classification to reflect current industry standards, the bill reduces unnecessary government interference in the pricing and distribution of domestic wines. This change reflects a more rational and restrained approach to alcohol taxation, consistent with minimizing government overreach.

• SB 2158 (Same As)