Excise Tax Repeal Gets Renewed Interest
Before the August recess, the Modern, Clean and Safe Trucks Act of 2023 was introduced by Senators Todd Young (R-Ind.) and Ben Cardin (D-Md.). The repeal of the federal excise tax is a key piece of the legislation. A similar version of the bill was drafted by House policymakers and both versions are with tax-writing committees for further consideration. The 12% tax was introduced over 100 years ago to help pay for World War I. Perhaps that should be a cautionary tale for changing tax law. With new technology and the environmentally conscious approach to new trucks and trailers, the cost of new equipment has risen significantly over the last several years. Many heavy trucks with sleeper cabs are $180,000 or more so a company could be facing an excise tax over $20,000 per vehicle. In an industry that often utilizes leverage, companies are currently facing higher interest rates on debt to finance these new purchases as well.
A repeal of the tax, besides being a cost savings benefit for businesses, would potentially spur an increased interest in adopting vehicles that have advanced technology and that are more environmentally friendly. It could also potentially have a ripple effect lowering costs along the supply chain. Congress will be back in session after Labor Day but there is no timetable or guarantee these bills make it past committee.
Nathan is a CPA and has more than ten years of experience providing tax planning, consulting and compliance services to a number of privately held businesses and individuals in a variety of industries, with a special focus on the transportation and logistics industry. He actively communicates with clients and seeks ways to align their individual and business goals with available tax strategies to allow them to make well-informed decisions.
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