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Demystifying Federal Excise Tax on Trucks

Demystifying Federal Excise Tax on Trucks


Federal Excise Tax on Trucks

If you are the truck driver, buyer, or seller, you must have already been aware of the federal excise tax applicable to the trucks. But do you know what a federal tax on trucks is, why that even exists, or how it may affect you?

In this blog, we’ll cover the 12% excise levied on certain trailers, tractors, and trucks in the US. As you continue reading, you'll learn how to calculate and pay the taxes, which will help you navigate and comply with excise taxes on trucks easily.

What is a Federal Excise Tax on Trucks?

The federal government puts excise taxes on the sale of a truck. A tractor or truck is used on a highway and is referred to as a highway vehicle. When it carries a typical load along with its engine, whether small or large, it tows a vehicle, including semi-trailers or trailers, if it exceeds a certain weight threshold.

In this regard, the seller must pay the federal excise taxes unless it is on lease or resold to a new buyer. The seller will accept the statement from a buyer regarding the same, and the purchaser will be reliable in paying the tax.

Where the federal excise tax on trucks goes, these taxes collected are expenditures for the highway trust fund, which uses the funds to repair and build the highway infrastructure due to the wear and tear of heavy load impacts on the roads.

When is Federal Excise Tax on Trucks applicable?

The taxes are applicable when the first retail sale occurs after manufacture and production, except for resale and long-term lease. The 12% tax, as per IRS Code Section 4051, is levied on truck chassis exceeding 33000 pounds. On the trailers and semi-trailers, if it exceeds 26000, and on the tractors, if it exceeds 19500 pounds and has a total combined weight of more than 33000 pounds.

Now you know that the collection and reporting of the taxes come to the seller, who remits them by filing the quarterly 720 form with the IRS online or offline.

Form 720 Due Dates to remember

The deadline for filing Form 720 is in the quarter when there is a taxable event. Here are the due dates set as follows:

  1. The sales that took place in January, February, and March will have a due date of April 30th.

  2. The sales during April, May, and June will pay dues by July 31st.

  3. July, August, and September sales will be due on October 31st.

  4. October, November, and December sales are due by January 31st.

Note that used trucks are not subject to Excise Tax, but when you export them to another country or import them back and make a sale, they would be taxed and considered as if they were a first sale.

The Wrap

As a truck driver, seller, or buyer, you must know the federal tax on trucks and how to comply. These FETs are used to fund the maintenance and improvement of the highways.

To avoid penalties and interest, you should pay the tax on time and file the required forms with the IRS. You should also keep records and receipts to support your tax payments and deductions.

Looking for a professional Excise Tax service? Then, Simple 720 can help you with the same.

Reach our team today to file your Excise Taxes on Trucks Online!

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