Industry fed up with Federal Excise Tax, but repeal is a longshot

The American Revolution was kickstarted by a founding principle of no taxation without representation. But 250 years later, there’s a tax on trucking, the Federal Excise Tax, that lives on despite the years of protest from fleets and their representatives.

The effort to repeal FET, applicable to first sale of any vehicle over 33,000 lbs. GVWR, has been a biennial rite of spring since 2010 as pro-trucking members of Congress have worked up legislation, often with an eye on the next highway bill, also known as the surface transportation reauthorization package.

Laying out trucking’s legislative priorities for the upcoming highway bill last summer, ATA President and CEO Chris Spear pointed out that FET “was to fund trench warfare in World War I” and is “outdated,” when he testified before a Senate Commerce Transportation subcommittee. He asked again for a repeal to the subcommittee this June.

It’s also ballooned four times the initial 3% tax to 12%. Spear noted how much that could cost for a large fleet turning over cycling out a third of its fleet, or about 1,800 tractors. By our calculations, if each in 2027 costs $200,000 (a generous estimate factoring for the more expensive EPA27 engines), that equates to $43.2 million on the FET alone.

This money usurped by Uncle Sam could be better spent if kept by fleets and allocated for training drivers and technicians and paying them more, Spear argued. Lowering the initial cost for new equipment would also allow more new trucks with clean diesel engines to enter the industry, which he estimated would slash truck emissions by 83%.

And the more sustainable a fleet, the more it is penalized. Commercial zero-emission vehicles have a higher initial cost, so the FET hits them harder and may effectively wipe out a tax credits and state subsidies. Likewise, safety-conscious fleets also get hit harder.  Equipping your tractor with state-of-the-art advanced driver assistance systems (ADAS) also raises that initial price.

The end result is that well-meaning fleets who want to reduce their carbon footprint and make the roads safer cannot do so at the pace they would without the FET.

“This limits me every year when I am forced to buy twenty or twenty-one trucks instead of twenty-five newer, cleaner tractors,” Taki Darakos, VP of maintenance at Pitt Ohio, testified to Congress in April 2024, while stumping for the Modern, Clean and Safe Trucks Act (H.R. 1440).

That was one in a long line of failed bills.

Taxation despite representation

Support for repeal has been a legislative priority for manufacturers, dealers, and fleets for more than decade, with various association-organized visits to Congress, including a rally in front of the Capitol by the newly formed Modernize the Truck Fleet (MTF) coalition in 2019. Taking the lead were American Truck Dealers, the National Trailer Dealers Association, the National Tank Truck Carriers Association, NTEA — the Association for the Work Truck Industry, the Truck and Engine Manufacturers Association, and the Truck Renting and Leasing Association.

That assembly yielded no proposed legislation.

Then, in June 2020, the coalition and more than a hundred of its closest corporate and industry association supporters pleaded with Congress for relief during the chaotic pandemic months. A bill was introduced that called for a temporary halt on FET assessments—but the language didn’t make it into any of the COVID recovery packages.

Just two years later, the industry was still hoping against hope.

“FET repeal is something we've worked on for years and years,” Mike Kastner, NTEA senior vice president, told Fleet Maintenance at Work Truck Week in 2023. With the new technology that's coming out, vehicles will become more efficient but probably more expensive—which means more FET. That defeats the purpose of trying to get more fuel-efficient vehicles out there, and keeps people holding on to their old vehicles longer.

“There's a great bipartisan set of sponsors that I think provides the best opportunity we've ever seen,” Kastner noted

Yet, here we are—still.

A year ago, language proposed for the One Big Beautiful Bill Act would’ve reduced FET to 2%—but it didn’t make the final funding package.

The latest swing was a revised version of the Modern, Clean and Safe Trucks Act (HR 2424).

Spear, speaking with trucking editors at last fall’s ATA Management Conference and Exhibition, was hopeful about the newest effort. He suggested ATA would be more directly engaged in pursuing repeal, rather than leaning on various coalitions as the organization has done in the past.

“I think now we have a very good, grounded reason for asking for it in the next package that moves through Congress,” Spear said. “And, candidly, we need some relief for these motor carriers. If you're going to absorb the [Section] 232 [tariffs], if you absorb the [EPA] low-NOx rule, you can't keep adding costs onto the industry when it's not moving freight.”

Alas, while much of the sweeping ATA legislative agenda—infrastructure investment, truck parking, numerous workforce issues, electrical vehicle fees, autonomous vehicle standards, cargo theft prevention, CDL school requirements—is included in the initial draft of the highway bill, or the BUILD America 250 Act published in mid-May, FET repeal doesn’t get a mention in the 1,000-page piece of work from the House Transportation & Infrastructure Committee.

The funding problem

That the repeal of FET is so important to one of America’s most critical industries should make it a no-brainer—and Congress should be fully qualified and capable of handling it.

Mike Joyce, lead lobbyist for the Truck Trailer Manufacturers Association and a policy strategist specializing in transportation and infrastructure, spelled out the snag: HTF.

“The Highway Trust Fund has not kept up with inflation,” Joyce said, speaking at last year’s TTMA convention. “In fact, we haven't raised the federal fuel tax since 1993—while postage stamps have gone up 19 times, so it’s hardly a surprise the HTF is no longer sufficient to fully fund surface transportation infrastructure.

He added that, “Congress has zero appetite on both sides of the aisle to raise fuel taxes, so that's going to be a problem when it comes into 2026 and passing a highway bill.”

Joyce put FET revenue at about $7 billion in 2023 and, even with FET, fuel taxes can’t keep up with recent spending. Proposed FET alternatives like indexing the fuel tax, annual registration fees, or vehicle miles traveled (VMT) taxes have been discussed. VMT has faced resistance from the trucking industry.

It’s a dilemma. Just as the trucking industry came out in opposition to a gas tax pause during the Iran war, undercutting the long-term viability of HTF is a problem for highway transportation.

NTDA has been a leading advocate for FET repeal, but the effort is taking a backseat during the current Congress. The association is focusing its policy attention on resolving the federal tax code around trailer dealer floor plan assessments.

FET also remains a net positive source of federal revenue, as NTDA President Gwen Brown told Fleet Maintenance. Approximately 14% of Highway Trust Fund revenues are generated through the FET, while roughly 18% comes from the federal diesel tax. However, Brown noted, during weaker commercial vehicle sales cycles, FET revenues can decline significantly.

“Given these fluctuations, it is appropriate to reevaluate how the FET is structured, collected, and applied,” Brown said. “The current requirement for a 12% tax payment upfront creates a significant barrier to purchasing decisions and can discourage both fleet managers and individual buyers from replacing vehicles when desired, instead delaying purchases until absolutely necessary.”

A more “balanced and predictable” approach should be considered—one that smooths FET revenue generation over time, similar to annual vehicle registration or license plate fees, Brown proposed.

Another option would be to allow the tax burden to be distributed over “the first four or five years” of vehicle ownership, reducing the upfront financial impact while still preserving a consistent revenue stream for the Highway Trust Fund.

“Unfortunately, issues surrounding highway infrastructure, the FET, and transportation funding often fail to capture significant political attention, making it unlikely that a comprehensive reauthorization bill will pass in 2026,” Brown said.

But National Tank Truck Carriers isn’t backing off. The association has included FET repeal among its Tier 1 regulatory and legislative priorities for 2026. After all, a fancy, new tank trailer can run $150,000 or more.

“If you love chaos, you love what's going on in Washington, DC, right now; it is exceptionally tense,” said NTTC lobbyist Britton Clarke Mullen, speaking at the 2026 NTTC Annual Conference in April. “So, this tax was first created to pay for World War I in 1917. Come on, guys, right? The challenge that we continue to face as an industry, with leadership in Congress, is that y’all have got to find a way to replace this tax. As an industry, we have to come together and figure out a viable solution. And that's not just tank truckers, that's TCA, ATA—all of us together as an industry—and right now, we have not been successful to find that one viable solution that we can get behind.”

Mullen, though, is not bullish on the tax going anywhere anytime soon.

“Don't kill the messenger but, unfortunately, I don't see a path forward right now for repealing the Federal Excise Tax,” she said. “However, we will continue to talk about it and hopefully have action sooner rather than later.”

FET lives on

As this issue goes to press, the only action on the Modern, Clean and Safe Trucks Act of 2025 since its introduction came in April, when Rep. Darin LaHood (R-Ill.) became the lead sponsor. The bill was originally introduced by Rep. Doug LaMalfa (R-Calif.), essentially the father of FET repeal, with LaHood a leading co-sponsor through several tries.

LaMalfa died in January while undergoing emergency surgery for an aortic aneurysm. Without its champion—and more importantly, a feasible alternative for HTF funding—the FET is likely to outlive us all.