Overview
Title
To amend the Internal Revenue Code of 1986 to repeal the excise tax on heavy trucks and trailers, and for other purposes.
ELI5 AI
H.R. 2424 is a proposal to stop charging an extra cost on new big trucks and trailers, making them cheaper, so people are more likely to buy newer and safer ones. However, this might mean there’s less money to fix roads unless they find a new way to pay for it.
Summary AI
H.R. 2424 aims to change the Internal Revenue Code by removing the excise tax on heavy trucks and trailers. This tax, which is 12% of the cost, makes new trucks and trailers more expensive and discourages replacing older models with more environmentally friendly and safer vehicles. By repealing this tax, the bill seeks to promote the use of modern, clean, and safe trucks, supporting environmental and safety advancements in the trucking industry. Additionally, it suggests the need for a more stable way to fund the Highway Trust Fund, as the current tax revenue is inconsistent.
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AnalysisAI
Summary of the Bill
The proposed legislation, titled the "Modern, Clean, and Safe Trucks Act of 2025," aims to amend the Internal Revenue Code of 1986 by repealing the excise tax on heavy trucks, tractors, and trailers. This tax, currently set at 12%, is the highest percentage rate of any federal ad valorem excise tax. The bill argues that this tax significantly increases the cost of new vehicles and dissuades the purchase of environmentally-friendly, modern trucks and trailers. The repeal is positioned as an effort to encourage the deployment of safer, cleaner vehicles and includes amendments to various sections of the tax code to eliminate this tax.
Significant Issues
One of the primary concerns with this bill is the potential funding gap it may create for the Highway Trust Fund, which relies on revenue from the excise tax. With no alternative funding mechanism clearly outlined in the bill, there's a risk of financial shortfalls that could affect infrastructure projects across the country. Moreover, the definition of "mobile machinery" in the text lacks clarity, which could lead to varying interpretations and potential legal disputes over tax exemptions.
Furthermore, while the bill emphasizes the environmental benefits of newer vehicles, it does not thoroughly address the potential environmental impacts of increased production and use of heavy-duty trucks. Additionally, the technical nature of the legal amendments proposed in the bill may be challenging for laypersons to understand, potentially leading to non-compliance or misinformation.
Impact on the Public
For the general public, the removal of the excise tax might lower the purchase cost of new heavy trucks and trailers, potentially making it more affordable to upgrade to newer, more environmentally friendly models. This could lead to reduced emissions if older vehicles are replaced. However, the lack of a clear alternative to fund the Highway Trust Fund might lead to delays or cuts in transportation infrastructure projects, which can affect public road quality and safety over time.
Impact on Stakeholders
Specific stakeholders, such as manufacturers, suppliers, and trucking companies, could benefit from the reduced cost burden of heavy vehicles, likely leading to increased sales and potentially accelerated industry growth. Conversely, small businesses and individual owner-operators could face challenges if the expected benefits, like lower vehicle costs, do not materialize or if infrastructure deteriorates due to funding shortages.
Environmental groups might express concern over the bill's potential long-term environmental impact, as it suggests removing a tax incentive that encourages the reduction of less efficient vehicles from the roads. Without comprehensive analysis provided, it's challenging to fully understand the ecological ramifications.
In conclusion, while the bill presents opportunities for modernization and efficiency in the trucking industry, careful consideration and clear communication of its financial implications and environmental impacts are necessary to ensure an informed dialogue and policy-making process.
Financial Assessment
The proposed legislation, H.R. 2424, primarily addresses the repeal of a specific tax rather than allocating new funds or redirecting existing ones. The primary financial focus of this bill is on the 12-percent Federal retail excise tax imposed on new heavy trucks, tractors, and trailers. This tax has significant financial implications, as addressed in the findings of the bill.
The repealing of this excise tax could lead to substantial changes in the financial landscape for both the trucking industry and federal revenue streams. Currently, the tax adds significant costs to these vehicles: $7,000 or more for new trailers, $20,000 or more for new clean diesel trucks, and up to $50,000 for next-generation trucks with advanced technologies. By removing this tax, the bill aims to lower the cost burden on purchasers of new heavy vehicles, encouraging the replacement of older models. This aligns with the bill's environmental and safety goals of promoting the adoption of more advanced, cleaner trucks.
A key issue is the potential impact on the Highway Trust Fund. The excise tax currently contributes to this fund, which is crucial for highway and transportation infrastructure finance. The bill acknowledges that relying on a tax based on annual vehicle sales results in fluctuating revenue, suggesting there is a need for a more reliable funding mechanism. However, the bill does not specify an alternative source of revenue to fill the gap left by the repealed tax. This omission is problematic and could result in funding shortages for essential infrastructure projects, as noted in the issues section.
Additionally, the bill's focus on newer, clean technologies aims to reduce environmental impact, but it does not extensively explore the financial implications related to increased production demands for new trucks, nor the potential market effects, such as increased prices for smaller manufacturers or businesses that depend on these vehicles.
The legislation includes a variety of amendments to sections of the Internal Revenue Code to implement the tax repeal, but does so with complex language that may obscure understanding. This complexity, alongside a vague effective date tied to the bill's introduction, may pose compliance challenges for businesses and stakeholders navigating the transition.
Overall, while the bill seeks to stimulate certain economic and environmental benefits through tax repeal, it leaves significant financial ambiguities, particularly concerning a reliable alternative to sustain the Highway Trust Fund and ensure continued support for infrastructure funding critical to national and local economies.
Issues
The repeal of the excise tax on heavy trucks and trailers may lead to significant funding shortages for the Highway Trust Fund, as no alternative revenue mechanism is clearly defined or proposed in Section 2.
The lack of clarity around what constitutes 'mobile machinery' in Section 3 could lead to varying interpretations and potential exploitation or legal disputes over tax exemptions.
The bill does not provide a comprehensive analysis of the environmental impact of increased production and use of heavy-duty trucks, especially considering the potential rise in emissions from older vehicles kept longer due to excise tax eliminations as described in Section 2.
There is a notable absence of detailed explanations or justifications for repealing the excise tax on heavy trucks and trailers in Section 3, potentially leading to public criticism and misunderstanding about its benefits or disadvantages.
The effective date tied to 'the date of the introduction of this Act' in Section 3 could create confusion and compliance challenges if not properly communicated and enforced.
There may be significant financial implications for different stakeholders, including small businesses and manufacturers, as the repeal may disproportionately affect businesses buying new vehicles, noted in Section 2.
The technical language and complexity of the legal amendments in Section 3 may be difficult for stakeholders without a legal or tax background to understand, potentially leading to non-compliance or misinformation.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the act establishes its official name as the “Modern, Clean, and Safe Trucks Act of 2025”.
2. Findings Read Opens in new tab
Summary AI
The section outlines Congress's findings about the impact of the 12% Federal excise tax on new heavy trucks, tractors, and trailers. It highlights that this tax is the highest of its kind, increases vehicle costs, discourages the adoption of environmentally friendly technologies, and is inconsistent in funding the Highway Trust Fund. Congress suggests considering the removal of the tax to encourage the usage of cleaner, safer vehicles and to seek more stable funding alternatives.
Money References
- Congress finds that— (1) the 12-percent Federal retail excise tax on all new heavy trucks, tractors, and trailers, coupled with new regulatory mandates, significantly increases the cost of new heavy-duty trucks, tractors, and trailers and discourages the replacement of older, less environmentally clean and less fuel economical vehicles; (2) this 12-percent Federal retail excise tax is the highest percentage rate of any Federal ad valorem excise tax; (3) the Federal excise tax was first levied by Congress in 1917 to help finance America's involvement in World War I; (4) the 12-percent Federal retail excise tax adds $7,000 or more to the cost of new trailers, $20,000 or more for new clean diesel trucks, and as much as $50,000 to the next generation of trucks with advanced engine technologies; (5) nearly half of the Class 8 trucks on the road are over 10 years old and lack a decade of environmental and safety technological advancements; (6) from 2007 to 2020, new trucks have reduced carbon dioxide emissions by 202,000,000 tons, nitrogen oxide emissions by 27,000,000 tons, and saved 20,000,000,000 gallons of diesel and 472,000,000 barrels of crude oil; (7) an owner of a single Class 8 truck powered by the latest clean diesel engine can expect to save about 2,200 gallons of fuel each year compared to previous generations of technology; (8) since the late 1990s, cleaner fuel and advanced engines have combined to reduce nitrogen oxide (NOx) emissions and particulate matter (PM) emissions by 98 percent; (9) 60 trucks manufactured today emit the same amount as 1 truck manufactured in 1988; (10) the Federal excise tax disproportionately impacts electric and alternative-fueled trucks, which currently have a higher up front cost, at a time when adoption of these technologies is needed to accelerate the transition to zero emission vehicles and the reduction of carbon pollution from transportation; (11) in 2020, there were approximately 1,300,000 United States manufacturing, supplier, dealership, and heavy-duty trucking and trailer related jobs; (12) since the Federal retail excise tax on certain new heavy trucks, tractors, and trailers is based on annual sales, receipts from the tax deposited in the Highway Trust Fund can vary greatly; (13) Congress should consider a more reliable and consistent revenue mechanism to fund the Highway Trust Fund; (14) Congress should advance the deployment of the most modern, clean, and safe trucks through eliminating the Federal excise tax on trucks; and (15) repealing the Federal excise tax would result in the replacement of older internal combustion engine trucks with new heavy duty trucks that employ the latest safety and environmental technologies.
3. Repeal of excise tax on heavy trucks and trailers Read Opens in new tab
Summary AI
The bill proposes to remove the excise tax on heavy trucks and trailers by eliminating certain tax code sections and making related adjustments to conform with this change. The amendments would take effect upon the introduction of the Act, affecting sales and installations from that date onward.