Cash-strapped state governments are using every means at their disposal to collect tax revenue. Although most of the money that state and local governments collect comes from income taxes, property taxes, and general sales taxes, most states also rely on a variety of smaller but still-important sources of taxation to add to their coffers.

So-called "sin taxes" on tobacco and alcohol are a popular way for governments to raise money, and this past week, the Tax Foundation featured a beer-tax map that shows the amount of taxes that state governments collect on beer. Let's take a look at the five states that charge the highest excise taxes per gallon on beer sales, along with figures from the Beer Institute showing where they rank in terms of beer consumption.


5. Hawaii
Hawaii charges $0.93 per gallon in state excise taxes on beer. As a popular tourist destination, visitors to the islands represent a substantial addition to the beer that its residents drink, and the resulting revenue helps balance extremely high state income tax rates. With average annual per-person beer consumption of 31.2 gallons per person annually, Hawaii makes it into the top 20 states in the nation.

4. Georgia
Georgia's state excise taxes on beer amount to $1.01 per gallon. Somewhat surprisingly for such a hot state, Georgia's per-person consumption of beer finishes in the bottom 10 in the country, at just 25.9 gallons per person annually. Yet with relatively low collections of income tax, property tax, and sales tax, Georgia's tapping beer as an excise-tax revenue source makes sense for its finances.

3. Alabama
In Alabama, the state government charges $1.05 per gallon in beer excise taxes. With 30.5 gallons per person of annual consumption, Alabama isn't a huge state for beer-drinking, but it does make it into the top half of all 50 states. Moreover, very low tax rates for income, sales, and property taxes make beer-tax revenue useful.

2. Alaska
Alaska may seem like the last place on Earth you'd want a frosty cold beer, but somewhat surprisingly, the icy state weighs in right in the middle of the pack in terms of the amount of beer residents drink, at 29.8 gallons per year. Still, given Alaska's lack of a state income tax, the state government sees it as a useful revenue source, charging $1.07 per gallon in excise taxes on the beverage.

1. Tennessee
Taking top honors in the beer excise tax list is Tennessee, which charges $1.17 per gallon in excise taxes. With its state income tax applying only to interest and dividend income, Tennessee has to make up revenue from other sources, and with the state being well known for spirits like whiskey, putting more of the burden on beer makes sense for the local economy. Moreover, beer is relatively unpopular in the state, with per-person consumption of 25.7 gallons ranking among the 10 lowest in the nation.

The impact of beer taxes
State excise taxes on beer don't necessarily have a huge impact on state budgets overall, but in tough times, they still represent an important source of tax revenue, and beer producers from giants Anheuser-Busch InBev and Molson Coors down to smaller craft beer producers like Boston Beer end up bearing their share of the burden along with their customers.

Excise taxes may affect Boston Beer, but its Samuel Adams brand helped to redefine beer and kick off the craft beer revolution in the United States. Success breeds competition, though, and while just a few years ago Boston Beer had claim over most of the craft beer shelf, today the field is crowded. Can Boston Beer rise above the rest, or will it be squeezed between small local breweries on one side and global beer giants on the other? To help you decide, we've compiled a premium research report filled with everything you need to know about Boston Beer's risks and opportunities. Just click here now to find out whether Boston Beer is a buy today.

The article These 5 States Tax Beer the Hardest originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Boston Beer and Molson Coors and owns shares of Boston Beer. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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