This week, the U.S. Senate released a draft of its sweeping tax reconciliation package, and tucked inside is a provision that could permanently secure one of the territory’s most important revenue streams: the rum cover-over at $13.25 per proof gallon.
If enacted, the move would protect more than $1 billion in future funding for the Virgin Islands and Puerto Rico—dollars that currently support everything from pensions and public safety to schools and infrastructure. But while the provision’s inclusion in the Senate version of the bill is a significant victory, the deal isn’t done yet.
The bill – known as H.R. 1, or the “One Big Beautiful Bill” – still has to clear the full U.S. Senate, where a vote could happen as early as this week. If it passes, it must then be reconciled with the House version, which does not include the rum provision. Only after both chambers agree on final language will the bill head to U.S. President Donald Trump’s desk for signature.
Without congressional action, the $13.25 rate is set to drop back to $10.50 per proof gallon after December 2025, slashing the Virgin Islands’ share of cover-over revenue by more than 20 percent. In strong production years, the territory receives around $200 million in cover-over payments—meaning a rollback could result in an estimated $40 million annual loss, depending on rum production levels and mainland consumption trends.
That drop would hit hard at a time when the dollars are needed most to stabilize the pension system, fund essential services, and maintain investor confidence in the territory’s long-term fiscal outlook.
“This marks an important step toward greater economic certainty and fiscal stability for the Virgin Islands,” Gov. Albert Bryan Jr in a statement Saturday. “If this bill is signed into law, it will not only prevent a rollback to $10.50 per gallon—it will ensure the necessary revenues that support our pension system, public services, and economic development over the next decade.”
The Senate’s addition of the provision came after months of lobbying by Bryan, Puerto Rico’s Governor Jenniffer González-Colón, and Delegate Stacey Plaskett, who has championed the issue in the House through bipartisan legislation (H.R. 1378) with Republican Congressman Ron Estes. Idaho Senator Mike Crapo, the top Republican on the U.S. Senate’s Finance Committee, was instrumental in inserting the provision into the Senate’s draft—a move Bryan called in a news release Saturday proof of what consistent federal engagement can accomplish.
“Senator Crapo gave me his commitment, and he followed through,” Bryan said. “His support and the Senate’s action reflect the effectiveness of our direct and persistent engagement at the federal level.”
But Plaskett – who earlier introduced the House version and offered an amendment in committee to draw bipartisan support – also cautioned that the inclusion is not final. “While I cannot support the bill in its entirety,” she said, “I applaud the Senate’s provision to permanently provide the increased rum cover-over rate of $13.25, effective Dec. 31, 2025.”
She emphasized that the measure is not retroactive, meaning the territory will not recover the higher rate lost between January 2022 and December 2025. “This is not the first version of this bill, and we cannot guarantee that this provision will be included in the final version,” Plaskett said. “I am hopeful that the increased rum cover-over rate remains in the bill.”
The broader bill, which includes deep Medicaid cuts and tax breaks for corporations and the wealthy, has drawn sharp criticism from Democrats and some community advocates. Still, for the Virgin Islands, the rum cover-over fix could be the most consequential provision in the entire package.
Bryan acknowledged that the fight is not over but remains optimistic. “We’re not done yet—but we’re in a stronger position today than we were just weeks ago,” he said. “This is the kind of federal result that comes from building a presence in Washington and working with Delegate Plaskett and other congressional leaders speaking up with one voice for the people we serve.”
Plaskett said she will keep working to that the territory’s interests are protected in any final tax legislation.
“This provision is a recognition of the value our rum industry brings to the U.S. economy—and the critical role cover-over plays in our fiscal future,” she said.
St. Croix Source
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