The Federal Excise Tax on trucks was established in 1917 to create revenue for World War I. Since then, it has increased from the original 3% to a 12% tax. The FET is applicable to vehicles with a gross weight of 33,000 pounds along with trailers with a gross weight of 26,000 pounds. This tax was adjusted many times, specifically in April of 2005 and most recently in March of 2016. There are multiple adjustments and specifications to the Federal Excise Tax that are listed below. At Route Ready, we sell our trucks used, so this establishes all of our sales as FET exempt.
FET For New Trucks
An excise tax is added to the first, initial sale of an item. Section 4051 of the IRS code addresses Federal Excise Tax on the sales of certain large trucks. The FET tax on trucks is 12% of the total sale price that is added on when purchasing a new truck. The 12% Federal Excise Tax could lead up to over $30,000 in extra charges when buying a new truck. Generally, this tax applies to trucks and chassis over 26,000 pounds. This does not include a truck’s gross weight of 33,000 pounds. This tax also encompasses related parts and accessories such as tires. The body of a dump truck, eight cubic yards or fewer are included as a federal excise tax exemption. There is also another FET exemption when the seller establishes that the truck is “practical and commercial fitness for use.”
It can be hard to know the gross weight of a truck at its point of sale. The IRS has supplied four truck type categories that are an FET exemption. This list includes refuse packer trucks with a 20 cubic yard max load capacity, dump trucks with eight cubic yards of load capacity, dry freight with 24-foot body (length), refrigerated truck body with 24-foot body (length), and platform trucks with 21-foot body (length). These Federal Excise Tax exemptions are applicable to sales from April 4, 2020 and beyond.
Used Garbage Trucks Help Alleviate the FET Burden
This tax is only applicable on a truck that is brand new. When buying one of our used front loaders, rear loaders, side loaders, roll-off trucks, or vacuum trucks there is no need to search for an online answer to see if the FET applies to you. The tax simply does not apply after the initial sale of a truck. By buying yourself a used truck through Route Ready you are saving more than $30,000. We also supply an OEM 5-year Warranty on our trucks.
The FET tax on trucks has made it hard for small businesses to purchase the trucks they need to be successful in their operations. With Route Ready, all of our trucks are FET tax exempt. At Route Ready, formed in 2006 and refined in 2018, we are always looking for solutions to problems and our used trucks solve the FET tax problem that many businesses face when looking into garbage trucks. We have a warranty program that covers every truck with a 5-year OEM extended warranty along with an industry-exclusive Route Ready Confidence warranty.