Lawmakers Introduce Bill to Repeal Federal Excise Tax on New Trucks

Trucks on Mack/Volvo lot
John Sommers II for Transport Topics

Two members of the U.S. House of Representatives recently introduced legislation aimed at repealing the 12% federal excise tax on certain heavy-duty trucks, tractors and trailers.

Reps. Doug LaMalfa (R-Calif.) and Collin Peterson (D-Minn.) led a bipartisan effort April 29 to unveil the Modern, Clean, and Safe Trucks Act of 2019, which would repeal the tax.

The lawmakers emphasized in an announcement accompanying the legislation that, on average, the World War I-era federal excise tax could potentially add $12,000 to $22,000 to the sale of a new truck. Also, heavy-duty trucks on the roadways are nearly 10 years old. And, new trucks are equipped with multiple advanced safety features, while new technologies have helped to reduce nitrogen oxide emissions.

“[The tax] is an outdated and unnecessary barrier that discourages truck buyers from upgrading to more modern, cleaner and safer vehicles,” LaMalfa, a member of the Transportation and Infrastructure Committee, said in a statement April 30. “Most heavy-duty truck owners can’t afford a $20,000 tax bill per new truck, so they don’t buy them. They’re far more likely to purchase used or older trucks with older technology that are not as fuel efficient or don’t achieve the air quality goals the government demands.”

“Repealing this tax would encourage new, and cleaner, fuel-efficient vehicles on our roads,” added Peterson, chairman of the Agriculture Committee. “The [federal excise tax] makes it harder to invest in safer and cleaner fleets and does not represent the usage these vehicles are putting on our roads. This language should help drive the discussion toward addressing our transportation infrastructure needs and not singling out certain users for paying for it.”

Additionally, the lawmakers argued, the revenue generated from the tax is unreliable due to inconsistent year-to-year sales of trucks. They noted the revenue is directed to the Highway Trust Fund, an account used to assist states with infrastructure maintenance and construction.

According to the Internal Revenue Service, the 12% tax is imposed on the first retail sale of truck chassis and bodies, truck trailer and semitrailer chassis and bodies, and tractors used for highway transportation with a trailer or semitrailer.

The legislation was referred to the tax policy-writing Ways and Means Committee. The panel has yet to announce its consideration of the measure. Last year, Colorado Republican Sen. Cory Gardner introduced similar legislation that would have repealed the federal excise tax applicable to the sale of heavy-duty trucks. The senator is a member of the truck policy authorizing Commerce Committee.

Around the industry, the lawmakers’ bill earned praise from the Modernize the Truck Fleet Coalition. The group consists of members, such as the American Truck Dealers, the National Tank Truck Carriers, the National Trailer Dealers Association, NTEA — the Association for the Work Truck Industry, Truck Renting and Leasing Association, and the Truck and Engine Manufacturers Association.



Shortly after the bill’s introduction last month, coalition steering committee member Jodie Teuton, chairwoman of the American Truck Dealers, said the current tax discourages purchases of new trucks.

“This tax is as outdated as biplanes and trench warfare,” Teuton said. “[The coalition] applauds the bipartisan leadership Reps. Peterson and LaMalfa have shown by introducing this bill.”

The Highway Trust Fund is projected to approach insolvency in about two years, analysts have determined. The account, which assists states with maintenance and construction, is backed primarily by revenue from the 24.4 cents-per-gallon diesel tax, and 18.4 cents-per-gallon gas tax. The tax rate has remained unchanged since 1993.