(a) In general

Subpart A of part I of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

5012. Small distiller domestic sourcing credit

(a) In general

In the case of an eligible distiller, the amount of the tax imposed under section 5001(a)(1) on distilled spirits produced in the United States shall be reduced by $2.35 per proof gallon.

(b) Eligible distiller

For purposes of this section—

(1) In general

The term eligible distiller means, with respect to a taxable year, a taxpayer—

(A)

that produced not more than 100,000 proof gallons during each of such taxable year and the preceding taxable year, and

(B)

that produced not less than 90 percent of the proof gallons produced by such taxpayer during the taxable year are derived from domestically harvested materials.

(2) Controlled group

For purposes of paragraph (1), all persons which are treated as a single employer under subsections (a) and (b) of section 52 shall be treated as a single taxpayer.

(3) Certification

In the case of a determination under subsection (a) which occurs during a taxable year, a taxpayer may certify that such taxpayer is an eligible distiller for such taxable year.

(c) Recapture

In the case of any taxpayer which is not an eligible distiller with respect to which a reduction is determined under subsection (a) during any taxable year, there is imposed a tax in an amount equal to the reduction so determined for such taxable year.

(b) Clerical amendment

The table of sections for subpart A of part I of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:

(c) Effective date

The amendments made by this section shall apply to spirits produced after December 31, 2025.