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The Federal Excise Tax on trucks, commonly known as the Federal Retail Excise Tax, is a 12% tax imposed on the first retail sale of certain new heavy-duty trucks, tractors, and trailers. This tax applies only when the vehicle meets specific gross vehicle weight requirements defined under federal tax law.

The purpose of FET is to generate revenue for highway infrastructure by taxing large commercial vehicles that place greater wear on public roads.

The responsibility to pay Federal Excise Tax generally falls on the seller making the first retail sale of the taxable vehicle. This includes:

• Manufacturers of heavy trucks or trailers

• Dealers selling new taxable vehicles

• Importers bringing taxable vehicles or chassis into the United States

Although the tax amount may be included in the sales invoice and passed on to the buyer, the legal obligation to report and remit the tax remains with the seller.

Federal Excise Tax applies only to new highway vehicles that meet specific weight-based rules and are sold at their first retail sale.

Heavy Truck Chassis and Bodies

Truck chassis and bodies designed for highway use are subject to FET when the vehicle has a Gross Vehicle Weight Rating over 33,000 pounds. This weight threshold is a key factor in determining whether a truck is taxable.

Trailers and Semitrailers

Trailers and semitrailers are subject to FET when their Gross Vehicle Weight Rating exceeds 26,000 pounds. These vehicles are taxable even if they are sold separately from the truck or tractor.

Tractors

Truck tractors designed primarily to tow trailers or semitrailers are subject to FET when they weigh more than 19,500 pounds and have a gross combined weight over 33,000 pounds.

First Retail Sale Rule

FET applies only at the first retail sale, which is the first sale of the vehicle after manufacture or import. Subsequent resale of the same vehicle is not subject to Federal Excise Tax.

Vehicles that do not meet this weight thresholds are not subject to FET.

The Federal Excise Tax rate on trucks is 12 percent of the taxable sales price.

Taxable Sales Price Includes

• Base price of the vehicle

• Parts or accessories installed before delivery

Taxable Sales Price May Exclude

• Separately stated transportation charges

• Certain dealer installed items added after the first retail sale

The tax is calculated by applying 12 percent to the taxable sales price and must be reported for the quarter in which the sale occurred.

Federal Excise Tax on trucks must be reported using Form 720, Quarterly Federal Excise Tax Return.

• IRS Number 33 is used for Retail Tax and it covers truck, trailer, and semitrailer chassis and bodies, and tractors

Applicable Internal Revenue Code Sections

• IRC Section 4051 imposes the retail excise tax on heavy vehicles

• IRC Section 4216 defines how the taxable sales price is determined

• IRC Section 4221 outlines available exemptions

These provisions establish when the tax applies, how it is calculated, and when exemptions are allowed.

Certain transactions may qualify for exemption from FET, including:

• Vehicles sold for export outside the United States

• Vehicles sold to state or local government entities

• Sales to qualified tax exempt organizations when documentation requirements are met

• Certain resale or intercompany transactions

Proper records must be maintained to support any exemption claimed.

Conclusion

Federal Excise Tax on trucks is a critical compliance requirement for manufacturers, dealers, and importers of heavy-duty vehicles. Understanding vehicle eligibility, weight thresholds, tax calculation, IRS reporting requirements, and exemptions helps avoid costly penalties and filing errors.