Kombucha products that contain 0.5% or more alcohol by volume (abv) at any point in the production process are currently classified as beer (see 27 CFR Part 25; see also TTB Kombucha Guidance) and therefore subject to federal alcohol excise taxes and regulations. The Kombucha Act, which would allow Kombucha to contain up to 1.25% abv without being taxed or regulated as alcohol, will reportedly be reintroduced to Congress during this legislative session.

Kombucha is made by adding sugar to brewed tea and then fermenting the sugary tea with yeast and bacteria cultures. The fermentation process generates alcohol at levels that can be in excess of 0.5% abv.

The Act, which was originally introduced in March of 2019, defines Kombucha as a beverage (1) fermented solely by a symbiotic culture of yeast and bacteria, (2) containing a maximum of 1.25% abv, (3) sold or marketed as kombucha, and (4) derived from “sugar, malt or malt substitute, tea, or coffee” and not more than “20 percent other wholesome ingredients.” Beverages meeting this definition would not be considered an alcohol subject to taxation and regulatory oversight by the Alcohol and Tobacco Tax and Trade Bureau (TTB). This increased ceiling on alcohol content will provide increased manufacturing flexibility to the industry, which has struggled with modifications to the fermentation process to ensure that less than 0.5% alcohol is produced.