Please ensure Javascript is enabled for purposes of website accessibility The Inflation Reduction Act and the Trucking Industry

The Inflation Reduction Act and the Trucking Industry

By October 13, 2022Trucking Information

At the end of August, the Inflation Reduction Act was passed as a means of stimulating the economy by placing tax benefits and incentives in innovative areas, while also adding to the IRS. Since the economy relies on the trucking industry, it is important to understand how the Inflation Reduction Act impacts carriers and owner-operators.

Adding Employees to the IRS

There is a lot of hyperbole and fear surrounding the additional 87,000 IRS employees, ranging from lawmakers and pundits alike ranting armies of gun-toting accountants coming for your money to forcing businesses to go bankrupt. The reality is much more practical and much less exciting than the talking heads make it out to be. Currently, the IRS is dealing with a major backlog. Tax returns from 2019 were still being processed as of 2021. Carriers that claimed deductions or filed amended returns had to wait excessively long to see those adjustments take effect. Adding more employees will allow the IRS to clear out their backlog and process returns much faster moving forward.

The drawback to having a faster and more efficient IRS is that there is an increased likelihood that carriers might be audited. While an audit is nothing to worry about, the announcement of the added employees should be seen as a sign that trucking companies and owner-operators should hold onto all of their paperwork. That way, should an audit take place, they can simply provide the IRS with the information they need, instead of scrambling to get the requested documents.

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Ushering in the Age of Electric Vehicles

One of the biggest hurdles on the road to electric vehicles in the trucking industry has been the price. Low demand meant manufacturers were gun shy about mass-producing electric Class 8 vehicles, and the price remained high. While gas prices are still dropping after they skyrocketed in June, no one wants to experience price hikes at the pump again, whether it is caused by a natural shortage of petroleum, or because oil and gas investors inflated the price. The Inflation Reduction Act stimulated the purchase, use, and production of electric trucks. The act offers tax credits from $40,000 up to $100,000 for carriers that purchase electric vehicles, convert existing trucks to electric, and implement electric vehicle charging stations. These tax credits help the move to electric vehicles on multiple fronts. First, the tax credits make electric Class 8 vehicles accessible by cutting costs. Second, as more carriers and owner-operators switch to electric vehicles, the overall cost will drop because manufacturers will start making more. Third, by adopting electric vehicles, the trucking industry will start moving the needle toward the zero emissions mandate. Fourth, the tax credits for installing vehicle charging stations will help to provide the infrastructure necessary for electric vehicles to traverse long distances.

Unblocking Supply Chains

The Inflation Reduction Act may be exactly what is needed to get some movement on supply chain issues. It certainly is not a focused cure, but the provisions in the act do help. The tax credits and incentives for carriers and owner-operators to switch to electric vehicles, could allow existing carriers to expand their fleets while lowering their operating costs and cutting the diesel cord. Additionally, owner-operators may launch their own trucking companies to get access to the tax credits offered by the Inflation Reduction Act. With more trucking companies emerging – even if they serve a small radius – they will allow more products to be moved.

Launching Your Own Trucking Company

The benefits of launching your own trucking company are great, especially with the incentives laid out in the Inflation Reduction Act. However, getting all of the forms, permits, insurance, and everything else filled out properly and submitted to the correct agencies can be overwhelming. At Single Point Capital, we offer a start-up program for professionals who want to launch their own trucking companies. We will help you with everything from getting the proper registrations to getting your MC Number. Additionally, we will offer guidance and assistance to ensure you have a successful first year. Startup clients typically pay up to $1,700 to start their trucking companies, but if you are enrolled in our freight factoring program, we will waive all administrative fees. To get started, contact the team at Single Point Capital today.

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