The Push to Repeal FET

For a business purchasing a commercial truck, the numbers have to work. Purchase price, financing, fuel, maintenance, and expected revenue all influence the decision. For certain heavy trucks and trailers, a 12% federal excise tax (FET) adds another substantial cost before the vehicle generates its first dollar.

The National Automobile Dealers Association (NADA) and its truck dealer division, the American Truck Dealers (ATD), are advocating repeal of that tax. Their position: reducing the cost of new equipment can encourage businesses to replace older trucks with newer, safer, and cleaner vehicles. (nada.org)

What Is FET and Which Vehicles Does It Cover?

The federal excise tax, commonly called FET, generally applies to the first retail sale of certain heavy truck chassis and bodies, trailer and semitrailer chassis and bodies, and highway tractors. The rate is 12% of the taxable selling price, including certain related parts and accessories. (usc-cdn.house.gov)

Not every commercial vehicle is subject to it. Truck chassis and bodies suitable for vehicles with a gross vehicle weight of 33,000 pounds or less are excluded. For trailers and semitrailers, that threshold is 26,000 pounds. Highway tractors have a separate exclusion requiring both a gross vehicle weight of 19,500 pounds or less and a gross combined weight of 33,000 pounds or less. Special equipment and body exclusions also apply. (irs.gov)

FET generally does not apply when a used truck is resold, though extensive rebuilds, the first U.S. sale of an imported vehicle, and equipment added shortly after a new truck is placed in service can be exceptions. That makes FET a real factor when weighing a new truck against a used one. (usc-cdn.house.gov)

Why Repeal Matters to Truck Sales

Consider a truck with a $200,000 taxable selling price. FET adds $24,000, bringing the total to $224,000 before other applicable taxes and fees. For five identical trucks, the federal excise tax alone totals $120,000. Financing that amount adds interest expense as well.

Repeal would significantly reduce the cost of buying a new truck, which may affect a business's decision to replace an older truck, add a truck to its fleet, or buy one heavy-duty truck instead of multiple medium-duty trucks.

That last choice is already shaped by the 33,000-pound line. A straight truck rated at 33,000 pounds GVW or less avoids FET entirely, while a heavier truck carries the full 12%. Repeal would erase that gap.

NADA and ATD argue that the current tax discourages fleet turnover and delays adoption of improved safety and emissions technology. (nada.org) If repeal stimulates replacement purchases, it could also bring additional trade-ins into the used market, expanding options for buyers with smaller budgets. That potential effect would depend on how sellers and buyers respond.

What Is Being Done to Repeal It?

The bipartisan effort includes H.R. 2424, the Modern, Clean, and Safe Trucks Act of 2025, introduced in the House on March 27, 2025. Its Senate counterpart, S. 4657, the Modern, Clean, and Safe Trucks Act of 2026, was introduced on June 2, 2026, by Senator Todd Young, Republican of Indiana, with Senator Angela Alsobrooks, Democrat of Maryland. Both measures seek repeal of the federal ret

ail excise tax on covered heavy trucks and trailers. (congress.gov, govinfo.gov)

NADA and ATD are urging Congress to repeal the tax. (nada.org) One significant policy hurdle is transportation funding: FET revenue supports the Highway Trust Fund. The Senate bill's findings recognize the volatility of truck-sales-based revenue and call for consideration of a more reliable funding mechanism. (congress.gov, govinfo.gov)

Under current law, the tax is also scheduled to expire on October 1, 2028, which ties its future to the next highway funding reauthorization. Congress has extended it in past reauthorizations. (congress.gov)

What Should Businesses Do Today?

As of October 12, 2026, the 12% FET remains in effect. The two bills differ on timing. The Senate proposal would apply repeal to covered sales and installations on or after enactment and does not provide a general refund for earlier purchases. The House bill, as introduced, would apply to sales and installations on or after March 27, 2025. Final language could change before anything passes. (usc-cdn.house.gov, govinfo.gov)

Businesses should evaluate purchases under current rules while following legislative developments. Repairs, downtime, and missed work all belong in the calculation when considering whether to replace a truck or wait.

At CommercialTruckSales.com, businesses can explore commercial vehicles and connect with sellers. Whether purchasing one truck or expanding a fleet, understanding the full acquisition cost, including FET, is an essential part of making the numbers work.

This article provides general information. Legislative proposals may change, and vehicle specifications and transaction details affect tax treatment. Confirm applicable requirements with the seller and a qualified tax professional.