What is Truck Excise Tax in the USA? A Complete Beginner’s Guide

• Truck Excise Tax in the USA funds highways and enforces federal compliance.
• Two federal levies apply: 12% Retail Excise Tax and annual HVUT.
• Retail Excise Tax applies at first sale of new heavy trucks.
• HVUT applies to vehicles weighing 55,000 pounds or more using public highways.
• HVUT must be filed annually through IRS Form 2290 to avoid penalties.

Detailed Breakdown

Truck excise tax in the USA is a segment of federal tax mainly focused on generating funds for the national infrastructure, especially highways and bridges. Excise taxes are different from ordinary income or sales taxes. They are specific charges for particular goods, services, or activities – in this case, heavy-duty vehicles that cause significant road damage.

Retail Excise Tax (Federal Excise on Trucks)

The truck excise tax, known as the Retail Excise Tax in the USA, is a federal tax that is only applied once to the first retail sale of heavy trucks and related vehicles. It is intended for buyers of high-impact highway vehicles to be able to contribute proportionally to the funding of national infrastructure.

• This tax amounts to 12% of the vehicle’s total sales price, including any additional accessories installed before the first sale.
• It covers truck chassis and bodies intended for vehicles with a Gross Vehicle Weight (GVW) of more than 33,000 pounds.
• Trailers and semitrailers are considered taxable goods if their GVW exceeds 26,000 pounds.
• Highway tractors become taxable when their weight is over 19,500 pounds, and together with the trailer, their GVW is more than 33,000 pounds.
• The seller is usually obligated to pay the 12% excise tax to the IRS. However, this amount is mostly transferred to the buyer since it is included in the price of the truck.

If selling heavy trucks, this excise tax applies, and the transaction has to be reported quarterly via IRS Form 720 under the Retail Tax category No. 33.

ALSO CHECK -The Difference Between Fuel Excise Tax vs Other Federal Excise Taxes?

Heavy Highway Vehicle Use Tax (HVUT)

Who pays HVUT?

• HVUT is payable by the owner of any truck, tractor, or vehicle with a taxable gross weight of 55,000 lbs or more that is used on the roads of the U.S.
• Different from the Retail Excise Tax, HVUT depends on the weight and not on the value of the vehicle.

HVUT Essentials

• The tax year is the consecutive period from July 1 up to June 30 of the next year.
• Taxpayers need to submit a completed IRS Form 2290 when they want to disclose their taxes and also pay the amount due.
• To register a vehicle in most states, the owner is required to present the evidence that they have paid the tax (stamped Schedule 1).

Exemptions and Special Cases

A few products and conditions have not been considered taxable or have been granted special treatment according to the United States excise tax law.

• Local or state governmental purchases of trucks that are leased or bought for official use.
• The exportation of vehicles from the United States.
• The mobile machinery is exclusively for industrial applications other than road transportation.

Both vehicle dealers and their customers are expected to keep records that will confirm their exemptions.

Compliance and Reporting

For businesses manufacturing, importing, or selling heavy trucks:

• Submit Form 720 quarterly for Retail Excise Tax on Truck Sales.
• Submit Form 2290 yearly to pay HVUT on trucks with a Taxable Gross Weight of more than or equal to 55,000 lbs or more.
• Vehicle weight and sales records must be kept accurately to determine the correct amount of tax.
• If you miss the deadline, you risk getting penalties and interest. Timely or correct e-filing is highly recommended.

For simplified, precise electronic filing of forms like IRS Form 720, professionals and business owners can use an IRS authorized e-file platform to save time and ensure accuracy.

ALSO CHECK - Fastest Way to File Fuel Excise Tax Online

Conclusion

If you work with heavy vehicles of any kind, knowing the truck excise tax in the USA is something you shouldn't miss. Whether you are a manufacturer, dealer, fleet, or business operator, this federal tax structure that includes the 12% Retail Excise Tax and the Heavy Highway Vehicle Use Tax is an excellent way of making sure the larger vehicles contribute their fair share towards the funding of the infrastructure and are compliant with the regulations.

To make your excise tax compliance process less complicated, head over to easily file your IRS Form 720 with expert assistance.

FAQs

1. What exactly is the truck excise tax in the USA?
   • Truck excise tax in the United States is a combination of different federal taxes, such as the 12% Retail Excise Tax on the first sale of heavy trucks and the annual Heavy Highway Vehicle Use Tax, which is based on the weight of the vehicle and its usage on highways.
2. Who pays the federal truck excise tax?
   • Retail Excise Tax has to be paid by whoever sells the product, i.e., manufacturer or dealer, while the vehicle owner pays the annual highway use tax (HVUT).
3. Is every truck subject to this excise tax?
   • No, only those vehicles that meet certain weight and use criteria, such as a gross weight over 33,000 lbs for Retail Excise and over 55,000 lbs for HVUT, are taxable.
4. How is the truck excise tax calculated in the USA?
   • Retail Excise Tax is a tax of 12% of the sales price for qualifying new vehicles. HVUT, on the other hand, is a weight-based annual fee that is reported on Form 2290.
5. Can I file excise tax forms electronically?
   • Yes, filing of IRS Form 720 or any other excise tax returns can be done electronically. With platforms like efile720.com, you can have the filing process greatly simplified.