Push to Repeal Federal Excise Tax

Over the last few years, there has been a lot of industry-led attempts to repeal the 12% federal excise tax (FET) on heavy-duty trucks. Last week, there was another push from the American Truck Dealers, American Trucking Association, and Zero Emission Transportation Association as they sent a letter to congressional leadership.

The FET was originally enacted back in 1917 on heavy-duty trucks to help cover the costs of World War I, and has increased over the years from 3% of the vehicle cost up to the 12% it currently sits at today. The tax applies to vehicles with a gross weight of 33,000 pounds, trailers over 26,000 pounds, or tractors with a gross weight of 19,500 pounds or combined weight of 33,000 pounds. It only applies to the first sale of heavy-duty truck, truck trailer, or semitrailer chasis/body.

With the average price of a new tractor increasing fairly dramatically over the last handful of years, the amount of FET can add anywhere from $15,000 to $25,000 to cost of a new tractor. Given approximately 90 percent of trucking companies have less than six vehicles, the amount of FET can influence decisions as to when to upgrade equipment. Proponents of an FET repeal argue would promote motor carriers to upgrade their current fleet to more energy efficient and safer vehicles.

Since 2017, there has been some various bills proposed to repeal the FET, including a bipartisan bill in 2021. However, these bills haven’t been enacted into law. There is another industry led push for a repeal in 2023. Time will tell if this is the year a potential repeal will happen.