A recent reintroduction of bipartisan legislation has Congress pushing to repeal the FET. The FET (Federal Excise Tax) is a 12% tax on the majority of heavy-duty trucks sold in the US. Along with trucks, this levy includes trailers and tractors and is calculated at the point of sale. Enacted in 1917 to fund World War 1, this is the highest tax Congress has imposed on a product. Some of the components of the FET include:
- A tax on new trucks with a GVWR (Gross Vehicle Weight Rating) of over 33,000 lbs.
- A tax on new trailers weighing over 26,000 lbs.
- A tax on chassis parts and truck bodies intended for heavy use.
Off-highway equipment, including machinery used for mining, forestry, and agriculture, is exempt from the tax. Over the last few years, Congress has made numerous attempts to repeal the FET, including a recent one in March. On March 26, Congressman LaMalfa reintroduced this legislation to the House along with Reps. Pappas, LaHood, Carbajal and Miller. Various Trucking Industry leaders and associations immediately had strong support for the reintroduction. CTA (California Trucking Association) CEO Eric Sauer expressed his gratitude while noting the importance of addressing fleet modernization.
Why is Congress Pushing To Repeal the FET?
Congress is pushing to repeal the FET due to the adverse impact they believe it has on the trucking industry. Congressman Lamalfa recently stated, “For over a century, the federal excise tax on heavy-duty trucks has gone from a temporary wartime measure to fund World War 1 to an outdated tax that punishes truck buyers,” A significant issue is that the FET raises the cost of purchasing a truck or trailer by thousands. For example, a semi-truck costing $250,000 will have an additional $30,000 added to the price. In turn, it burdens smaller owner-operators and fleets with having to purchase more expensive equipment. Many in the industry believe that it is an outdated tax and an inefficient funding method for modern domestic shipping.
Another issue leading to the push to repeal FET is that it is a roadblock to modernization in US trucking. The domestic shipping industry has recently been pushing towards cleaner, low-emission carriers and technologies. Newer carriers, including ZEVs (Zero-Emission Vehicles), tend to be more costly than regular trucks, and the FET furthers the cost. Due to the high prices, many owner-operators and fleets are opting to retain their older trucks. Rep. LaHood noted, “This outdated tax hinders trucking companies from hiring more drivers and upgrading their fleets to cleaner, safer, and more efficient models.” Congress also sees the FET as a barrier to the adoption of safer equipment coming from newer carrier models.
A1 Freight Solutions
Regardless of the policies or regulations that the government enforces, it should not stop you from transporting your goods. However, the shipper should take the proper steps to mitigate the disruptions that can come from not understanding the policies. Along with being present with the news, you can do this by speaking to a freight broker. Brokers act as intermediaries between the shipper and the carrier, coordinating freight transport for the shipper. They do this by being connected to a network of carriers prepared to move your shipment. Brokers also offer additional services, including document preparation, finding rates, consultation, and more. Reach A1 Freight Solutions at info@a1fsinc.com or 786-375-9420 to begin moving your cargo domestically.