About now, some taxpayers may be shaking, stirring or pouring out a cocktail to celebrate today’s end of the official tax filing season today (though those who have requested an extension, like me, still have some work to do). That’s a more fitting act than you might think. It turns out that the modern income tax system—quite accidentally—transformed American drinking culture.

The 16th Amendment Created the Modern Income Tax System

At the turn of the 20th century, Congress, under President William H. Taft, set out to create a new tax system. The 16th Amendment, which created the modern income tax system, got the nod from Congress in 1909 but would take four years to secure ratification by the necessary number of states. By law, a proposed amendment becomes part of the Constitution as soon as it is ratified by three-fourths of the states. At the time, ratification required 36 states (38 of 50 states would be needed to ratify the Constitution today).

On February 3, 1913, Delaware became the 36th state to ratify the amendment. Eventually, 42 of the 48 states ratified it (Alaska and Hawaii weren’t yet states, Florida and Pennsylvania refused to consider it, and Connecticut, Rhode Island, Utah, and Virginia voted no).

The text was simple: The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

The result? The modern income tax system.

Income Taxes Led To Drinking (But Not For The Reasons You Think)

With new income tax revenue, the country was no longer dependent on excise taxes, including those on alcohol. With that, Congress decided it could now afford the 18th Amendment, better known as Prohibition.

Prohibition was a nationwide ban on the manufacture, sale, and transportation of intoxicating liquors. The goal was to reduce crime and corruption, but it actually did the opposite, leading to widespread bootlegging, organized crime, and speakeasies (hidden bars).

The actual text of the 18th Amendment was short and left some important gaps. For example, it did not define key terms or explain how the new law would be enforced. Enter the Volstead Act.

The Volstead Act, which also passed in 1919, defined “intoxicating liquor” as any beverage with more than 0.5% alcohol, meaning it applied not only to spirits but also to beer and wine. Named after Andrew Volstead, the Chairman of the House Judiciary Committee, it set out rules, exceptions, and penalties and created the enforcement framework for Prohibition.

(Volstead would subsequently be voted out of office.)

The exceptions to Prohibition were narrowly tailored, but did offer some outs for creative souls. Alcohol remained legal for religious rituals (sacramental wine), medicinal purposes (doctors could prescribe "medicinal whiskey” even if they had not examined the patient), and scientific research and industrial manufacturing.

In October 1919, President Woodrow Wilson vetoed the Volstead Act. His reasons were largely technical—he felt that, post-war, it was a federal overreach—but he also had personal reservations. However, the “dry" movement in Congress was so powerful that it overrode his veto the very next day. The law officially took effect on January 17, 1920.

The new laws, however, didn’t stop people from drinking. It simply drove drinking underground to illegal bars and speakeasies—and ushered in an era of “anything goes” when it came to booze. Bootleggers and organized crime groups replaced legal distributors—the government estimated that by the mid-1920s, bootleggers had seized about 10 million gallons of previously legal booze.

When stashes of legal booze ran out, bootleggers turned to smuggling. Ships from the Caribbean (rum), Canada (whiskey), and Europe (champagne) would sit in international waters, and small, high-speed boats would zip out from the shore, buy crates of booze, and race back to secret landing spots along the coast.

Why mostly booze? It turned out that transporting and smuggling bulky, low-alcohol drinks (like beer and wine) wasn’t very efficient or cost-effective. So suppliers pivoted to hard liquor. It offered more alcoholic content per shipment and was easier to hide.

And at home, ordinary folks began thinking out of the (wine) box, making homemade wine and liquor—including bathtub gin.

Despite its name, “bathtub gin” wasn’t always distilled in a bathtub, though it certainly was on occasion (gross, right?). Instead, it was homemade liquor, typically made by taking industrial alcohol not meant for drinking and diluting it with water. You could add juniper flavoring and other botanicals to mimic or enhance the taste of gin.

Dangerous? Sure. But it worked.

Gin was fast and easy to make because it required no aging (unlike whiskey). Unlike most vodka, it had strong flavors that could mask the alcohol's harshness. That meant it could be made and sold (or consumed) quickly, making it a go-to during Prohibition.

So, How Did That Change How Americans Drank Booze?

To make the most out of their booze, bootleggers often watered it down with water and questionable additives, making the taste unappealing. And homemade booze wasn’t typically as smooth (or as safe) as commercial booze. It was difficult (and often inadvisable) to drink it straight.

So home mixers and speakeasy bartenders got creative. They mixed alcohol with other ingredients to mask the taste. Legal “soft” drinks—as opposed to hard drinks that contained liquor—like ginger ale and soda, added flavor and bubbles. Other additives, like lemon, mint, and fruit juices, helped disguise the taste of poorly distilled spirits.

The result was a period in which almost anything went when it came to mixing drinks. There was a lot of experimenting, with bartenders realizing that some flavors—like lemon—could make almost anything taste better. And since not everyone had the opportunity to patronize a speakeasy, bar books with recipes became popular. The flurry of creativity meant that some of the best-known cocktails in the modern era, including the Bee’s Knees, the Aviation cocktail, the Sidecar, and the French 75, can either trace their roots or popularity back to the height of Prohibition.

Eventually, the appeal of a (legally) booze-free society wore off. The government desperately needed the tax revenue and the jobs that the alcohol industry provided. During Prohibition, money was still being spent on booze—it just went to illegal sources. By 1930, America’s bootleggers were estimated to have earned $3 billion (about $59.32 billion in today’s dollars).

That kind of money had also attracted organized crime, which saw growth—and violence—increase. More than 1,000 people were killed in New York alone as a result of mob clashes during Prohibition.

(The fight against organized crime also increased the visibility of the newly created IRS Criminal Division, now IRS Criminal Investigation. The T-Men would eventually send Chicago gangster Johnny “The Fox” Torrio and Al Capone to jail—a feat that J. Edgar Hoover’s flashier G-Men at the FBI hadn’t been able to accomplish.)

Thirteen years after the great Prohibition experiment, Congress passed the 21st Amendment, which repealed it. The amendment still needed ratification, which was worrying because Congress feared that state legislators—many of whom had been lobbied by powerful temperance groups—might be too intimidated to vote for repeal. So, they tweaked the process. Today, the 21st Amendment is the only amendment ratified by state ratifying conventions rather than by state legislatures. The difference? Citizens were elected specifically to serve as delegates on this one issue, rather than relying on those already in office, ensuring that the popular vote would be counted.

Only two states, North Carolina and South Carolina, rejected the amendment. Eight other states (Georgia, Kansas, Louisiana, Mississippi, Nebraska, North Dakota, Oklahoma, and South Dakota) did not vote since the amendment was ratified before they could hold a convention.

At 5:32 PM EST on December 5, 1933, Utah became the 36th state to ratify the amendment. Prohibition ended instantly.

Americans were thrilled. Crowds flooded the streets in cities like New York and Chicago (which had become havens for organized crime during the booze ban). And President Roosevelt famously remarked, "What America needs now is a drink."

Economic Activity Today

Today, alcohol contributes roughly $1 trillion in total economic activity (factoring in production, sales, tourism and related spending).

Of that, beer alone is responsible for nearly a half-trillion in total economic impact, equivalent to roughly 1.58% of the U.S. Gross Domestic Product (GDP). In 2024, nearly $58 billion in tax revenues were generated by the production and sale of beer and other malt beverages (about $25 billion of that is attributable to federal tax, with about $3.2 billion alone in excise taxes).

In 2025, the wine industry generated nearly $323.55 billion in total economic activity. This resulted in nearly $20.99 billion in state and local business taxes and $25.05 billion in federal business taxes. In addition, the industry generated approximately $1.13 billion in federal consumption taxes and $6.07 billion in state consumption taxes, which include excise and sales taxes.

In 2024, the sale and distribution of spirits in the U.S. contributed approximately $200 billion to the U.S. economy. In the same year, distillers paid $6.7 billion in federal excise taxes.

If all of this history has inspired you to grab a drink, you’re in luck. Here are a few ideas.

The Income Tax Cocktail

The most historically fitting drink for Tax Day is the one that shares its name. The Income Tax Cocktail appears in Harry Craddock's celebrated Savoy Cocktail Book of 1930.

It’s a variation on the Bronx, which is a variation on the Perfect Martini with orange juice added. (In 1934, the Bronx was ranked the third most famous cocktail in the world, behind only the Martini and the Manhattan.) The Income Tax cocktail has a tweak: two added dashes of Angostura bitters. Some say the bitters are a wink at the bitterness of tax season.

1 oz fresh orange juice

2 dashes Angostura bitters

Orange twist, to garnish

Shake with ice until well-chilled. Strain into a coupe or cocktail glass. Garnish with an orange twist.

Honey and lemon were particularly popular Prohibition-era cocktail additives because they could mask the chemical taste of low-quality gin. And, unlike sugar, honey provided a thick, floral sweetness that could hide almost any "off" flavor.

The Bee’s Knees is often credited to Frank Meier, a bartender at the Ritz in Paris, catering to Americans fleeing Prohibition, but it became famous in American speakeasies.

¾ oz fresh lemon juice

¾ oz honey syrup (1:1 honey + warm water)

Shake with ice until well-chilled. Strain into a coupe or cocktail glass. Garnish with a lemon twist.

The sidecar is one of those cocktails with multiple origin stories. My favorite? It is rumored to have been invented at Harry’s Bar in Paris. According to legend, an American army officer would arrive in a motorcycle sidecar, and the drink was named after his preferred mode of transportation. The recipe first appeared in print around 1922 in Robert Vermeire's Cocktails and Harry MacElhone's Harry's ABC of Mixing Cocktails. (The recipes listed in the books were identical.)

2 oz cognac (or brandy)

1 oz orange liqueur (Cointreau or triple sec)

¾ oz fresh lemon juice

Rim half the glass with sugar. Shake with ice until well-chilled. Strain into a coupe or cocktail glass. Garnish with an orange or a lemon twist.

Not feeling the booze but want a festive toast to Tax Day? Try a Horse’s Neck.

Before Prohibition, the drink was often served with a shot of bourbon. During the dry years, it became the most famous "mocktail" of the era, marketed as a sophisticated alternative to alcohol on its own or with mixers. To make your own, simply pour a tall glass of ginger ale, then drape a long, continuous spiral of lemon peel over the edge so it looks like the neck of a horse.

Cheers to the End of Tax Season!

Whether you're celebrating a refund or just thankful that the season is over, enjoy your evening. Cheers!

© Forbes