The Senate is on the brink of deliberating a comprehensive three-year tax package, encompassing financial benefits tailored for both large and small trucking companies. This legislation garnered substantial bipartisan support as it successfully navigated through the U.S. House of Representatives.
Known as the Tax Relief for American Families and Workers Act of 2024, the bill secured an impressive 357-70 vote in the House on Jan. 31. It holds crucial provisions that amplify financial advantages for trucking enterprises, particularly in the realms of accelerated depreciation for capital investments and more generous deductions for interest expenses. These provisions are extensions of expiring benefits initially introduced in the 2017 Tax Cuts and Jobs Act during the Trump administration.
Ed Gilroy, the Chief Advocacy and Public Affairs Officer for the American Trucking Associations, hailed the legislation for advancing key priorities in the trucking industry, emphasizing its role in stimulating much-needed investments in the supply chain.
“We support this bipartisan effort that will pave the way for greater freight capacity, efficiency and innovation while strengthening small businesses and fostering good-paying jobs in the trucking industry,” Gilroy said.
Notably, the bill restores and extends the 100% expense for new equipment.
Under the current tax framework, the maximum allowable expense for qualifying property placed in service is $1 million for the taxable year.
According to the new tax plan’s explanation, “The $1 million amount is reduced by the amount by which the cost of such property placed in service during the taxable year exceeds $2.5 million.”
The new provision elevates this figure to $1.29 million, with adjustments for inflation for taxable years beginning after 2024.
“The provisions related to expensing assets is exactly what is needed for someone buying a new truck or rig,” said James Lucier, a tax policy expert and a principal with Capital Alpha Partners, a public policy research firm. “It would be quite helpful for independent truckers and small businesses involved in trucking.”
The legislation also extends the 100% bonus depreciation deduction for property placed in service between Dec. 31, 2022, and Jan. 1, 2026—an aspect particularly advantageous for owner-operators and smaller carriers, as highlighted by Barry Fowler, founder of Taxation Solutions Inc., specializing in tax provisions affecting smaller carriers.
“If you’re considering buying another truck, you can take that 100% depreciation expense in the first year — that’s definitely a benefit,” Fowler said.
Fowler, however, emphasizes the dependence of potential benefits on an individual’s taxable income.
“You may not want to take 100% depreciation expense if you’re in a lower tax bracket,” he said. “That’s something a tax preparer can help you navigate.”
Despite the bill’s bipartisan support in the Senate, its fate remains uncertain, with GovTrack.us assigning a 34% chance of enactment. This mirrors the legislative landscape’s inherent challenges, as only around 21% of bills that navigated past committees in the previous Congress ultimately became law, according to the nonprofit organization tracking pending legislation. The trucking industry will undoubtedly keep a close eye on these developments as the legislation heads to the Senate floor for consideration.
Source: Freightwaves
