Ontario Slashes Alcohol Taxes and LCBO Markups Starting August 1
Ontario has rolled out its most significant alcohol tax cuts in decades, effective August 1, 2025. The changes are aimed at boosting local producers and adjusting for global trade pressures.
Distilleries selling spirits on-site will now face a basic tax rate that’s been cut in half—down from about 61.5% to 30.75%. The LCBO markup on cider and ready-to-drink beverages with under 7.1% alcohol has also been reduced by nearly 50%, easing the cost burden on small manufacturers. For craft breweries, both LCBO markups and the beer basic tax have been lowered, alongside increased support through the Small Beer Manufacturers’ Tax Credit.
The Ontario government is backing these changes with $100 million in funding for 2025–26 and $155 million for 2026–27 to help local producers stay competitive.
Industry groups have welcomed the move. Ontario Craft Brewers called the reform transformational, while Ontario Craft Wineries acknowledged recent relief but urged further changes to LCBO fees affecting restaurant wine sales.
Also read: Canadian Annual Inflation Rises to 1.9% in June 2025
These tax cuts are part of Ontario’s broader plan to modernize its alcohol retail system and strengthen domestic producers amid economic uncertainty.
