Bipartisan Bill Would Repeal Federal Excise Tax on Trucks

The push to decarbonize the trucking industry and reduce pollution could lend momentum to the latest attempt to repeal the federal excise tax on new trucks.

Legislation has been introduced into both the House and Senate to repeal the 12% FET on the purchase of new trucks, which critics says penalizes trucking companies looking to invest in cleaner, safer vehicles.

The Modern Clean and Safe Trucks Act of 2023 was introduced in both the House and Senate by a bipartisan coalition of Congressmen and Senators, led by Sens. Todd Young (R-Ind.) and Ben Cardin (D-Md.) in the Senate. Reps. Doug LaMalfa (R-Calif.) and Chris Pappas (D-N.H.) led reintroduction in the House, with Reps. Earl Blumenauer (D-Ore.) and Darin LaHood (R-Ill.) also joining as original cosponsors.

The FET is currently the highest percentage excise tax levied on any product and could add $15,000 to $30,000 to the cost of new heavy trucks, trailers, semitrailer chassis, and tractors for highway use, explains a news release from Rep. Pappas. The FET applies to vehicles with a gross weight of 33,000 pounds.

This tax is paid at the time of sale and is not levied on used truck sales, encouraging the purchase of used vehicles.

“Nearly half of America’s trucking fleet is over 10 years old,” said Scott McCandless, chairman of American Truck Dealers and President of McCandless Truck Center of Aurora, Colorado. “Repealing the FET will be a giant step toward achieving our national goal of turning over America’s aging truck fleet.”

Rep. LaMalfa explained, “On one hand, regulators want operators out of older trucks, but on the other hand, this tax penalizes them for trying to update their equipment.”

American Truck Dealers and other groups have been pushing Congress to repeal the tax for years, and it's not the first repeal bill to be introduced. In 2013 and 2015 there even was discussion of raising the tax to help pay for highways.

‘Antiquated’ Tax

The FET was first enacted in 1917 to help pay for World War I. The bill’s sponsors explain that the tax originally was put in place to raise money for wartime mobilization in WW1 and WW2, fund Great Depression-era programs, and for the Highway Trust Fund.

“The federal excise tax has outlived its original purpose by more than a century,” LaMalfa said. ‘Truckers are an essential cornerstone in our supply chain, yet the tax code disincentivizes them from purchasing the most up-to-date equipment.”

The American Trucking Associations, American Truck Dealers, and the Zero Emissions Transportation Association praised the bill, as did The Association for the Work Truck Industry, known as NTEA.

“The federal excise tax on purchases of trucks adds nearly $25,000 to the cost of new equipment – slowing deployment of safer and more environmentally friendly vehicles,” said ATA President and CEO Chris Spear. “This more than 100-year-old tax, first instituted to support American troops during the First World War, has far outlived its usefulness and now acts as an impediment to creating jobs, reducing emissions and improving highway safety.”

On February 22, ATD, the American Trucking Associations, and Zero Emission Transportation Association sent a letter to House and Senate Leadership in support of FET repeal.

The American Truck Dealers said the FET is a major disincentive for trucking fleets to modernize their equipment with new, low-emission vehicles. It also has pointed out that the Environmental Protection Agency's new, stringent NOx standards could result in a major “pre-buy/no buy,” a significant deferral of new commercial sales, and a spike in older used CMV purchases.

"As in the past, when emissions standards are too stringent, they can result in major job losses, businesses closures, and a negative impact on potential air quality improvements," explained David Bell, National Auto Dealers Association director of legislative affairs, in a brief.

NTEA also said repealing this tax would give Congress the opportunity to create long-term stability in the Highway Trust Fund by replacing FET with a funding source not based on annual truck sales.