Will the Trucking Industry See the Federal Excise Tax Repealed?

For years, there have been initiatives to move the trucking industry away from fossil fuels and find ways to reduce the overall carbon footprint. From manufacturers like Volvo winding down the production of diesel-powered trucks to goals from Washington, DC to reach net-zero carbon emission by 2030, the race is on for the trucking industry to leverage new technologies to reach the goals set by a changing world. Yet while these initiatives are causing some internal strains among carriers, there may be a new positive point to come out of all of this. Bipartisan legislation has been introduced that would repeal the Federal Excise Tax on the trucking industry.

What Is the Federal Excise Tax?

The Federal Excise Tax (FET) is a holdover from the early years of the 20th Century. The FET was levied to raise funds for the First and Second World Wars, as well as a means of paying for the Highway Trust Fund and Depression-era social programs. The world has changed greatly over the past 100 years, and many in the trucking industry – as well as lawmakers – see the FET as a relic, outmoded, and no longer necessary. The tangible impact of the FET on the trucking industry is felt directly whenever carriers or owner-operators need to purchase vehicles. The Federal Excise Tax can add upwards of $20,000 to the price tag per Class-8 vehicle. This prevents smaller trucking companies from staying competitive, prevents larger carriers from achieving meaningful growth, and hinders the trucking industry as a whole from filling vacancies in a growing driver gap – all because the money they could retain and put toward other efforts is going to the FET. The current Federal Excise Tax rate levies 12% on trucking equipment, such as commercial vehicles with a weight of 33,000 pounds or more.

The Modern Clean and Safe Trucks Act

The Modern Clean and Safe Trucks Act of 2023 has already passed the House of Representatives, and is waiting to be approved in the Senate. The legislation is championed by both Republicans and Democrats alike, and it recognizes that for the trucking industry to make any progress toward clean energy and operating at optimal capacity, then capital needs to be freed up somehow. The most logical way to do this is by repealing the Federal Excise Tax. Eliminating the FET would free up capital on equipment purchases, allowing carriers, small trucking companies, and owner-operators to invest in technology that would help them reach their clear air goals by the 2030 mark. Additionally, the ability to retain capital from equipment purchases would allow the trucking industry to hire more drivers and close the gap, thereby improving supply lines throughout the United States.

Trucking Equipment

Repealing the Federal Excise Tax would be a major win for the trucking industry, freeing up capital and opening opportunities forward for growth and clean energy vehicles. However, even if the Modern Clean and Safe Trucks Act of 2023 sails through the Senate and gets approved without any opposition, it will take time before it goes into effect. Until then, trucking companies need an affordable way to get the equipment they need to maintain productivity and grow. Single Point Capital offers financing on Class A vehicles so trucking companies and owner-operators can get the equipment they need to keep rolling. Additionally, we offer insurance programs to alleviate the upfront cost of coverage to keep drivers on the road. Both programs are available to clients who are enrolled in our freight bill factoring program, which turns unpaid customer invoices into cash and makes funds available within a single day.

Learn More

If you want to get the best financing on trucking equipment complete with low-cost insurance while accelerating your cash flow, reach out to the team at Single Point Capital. We offer comprehensive freight bill factoring, equipment financing, dispatching, and even services for owner-operators who want to launch their own trucking companies. Find out why we are the one-stop shop for trucking companies and owner-operators throughout the United States. Our team will work with you directly to understand your needs, so we can create tailored solutions to help you reach your goals for long-term success.