image of a garbage truck

What Is the Federal Excise Tax, And What Does It Mean for You?

Purchasing a garbage truck represents a significant economic investment for any waste management company. New models can cost a whopping $400,000, and that’s before taxes and fees are added in.

One of the largest taxes on new garbage trucks is the Federal Excise Tax (FET). Since 1917, this tax has been one of the largest factors in purchasing a new garbage truck and a top reason to consider purchasing used waste trucks for sale instead.

Origins of the FET

The FET was first established in 1917 to help pay for wartime mobilization during World War 1. Unlike a general sales tax, excise taxes are placed only on specific goods or products, such as alcohol or tobacco.

Over time, the FET was repurposed several times, such as funding Great Depression programs, supporting the war effort again during World War 2, and bankrolling the Highway Trust Fund.

What started as a 3% FET on the purchase of any vehicle that weighs more than 33,000 pounds has grown to a 12% FET in addition to the vehicle sales prices of trucks and tractors. This makes the FET the highest percentage excise tax levied on any product in the United States and adds an average of $15,000 to $30,000 to a transaction.

A key part of the federal excise tax, however, is that it is not applied to used vehicles. This means that by purchasing a used garbage truck, not only do you save on the base cost of buying used vs. new, but you also dodge an extremely costly tax added on top of it.

Will the FET be repealed?

The FET may be coming to an end, however. In 2023, the Modern Clean and Safe Trucks Act was introduced in both the House and Senate by a bipartisan group of politicians led by Senator Todd Young, Senator Ben Cardin, Representative Dog LaMalfa, and Representative Chris Pappas.

Supporters of the bill argue that repealing the FET would encourage fleet owners to modernize their vehicles with new safety and environmental features. As of the time of writing, however, the bill has not yet passed, so the FET is still in effect.

Put Cash Back in Your Pocket

Even if the FET gets repealed, a used garbage truck is still significantly cheaper than a brand-new model. If you’re looking to add a garbage truck to your company’s fleet, then you need to contact Route Ready Trucks.

With Route Ready’s industry-leading certification and warranty program, you can have the peace of mind that your purchase will perform just as well as any brand-new vehicle.

Our 5-year OEM extended warranty comes with a safety compliance certification up to the highest standards of the Department of Transportation and a top-to-bottom preventative maintenance program.

Our sales team are experts at helping forecast your long-term trucking needs and can provide you with a garbage truck or terminal tractor quote as soon as you contact us.

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