WASHINGTON — The Senate may soon consider a three-year tax package that includes financial benefits for both large and small trucking companies. It passed the US House of Representatives with strong bipartisan support.
The Tax Cuts for American Families and Workers Act of 2024, approved in Parliament by vote 357-70 on January 31, allows accelerated depreciation for capital investments and provides more generous deductions for interest expense — provisions that extend the expiring benefits that were included in the Tax Cuts and Jobs Act of 2017, the tax bill passed by the Trump administration.
The legislation “advances many trucking priorities to drive much-needed investment in our supply chain, such as restoring and expanding 100 percent spending on new equipment,” commented Ed Gilroy, American Trucking Association. head of defense and public affairs when the bill passed the House.
“We support this bipartisan effort that will pave the way for greater freight capacity, efficiency and innovation while strengthening small businesses and encouraging good-paying trucking jobs.”
Under current law, the maximum amount a taxpayer can spend is $1 million of the cost of qualifying property placed in service for the taxable year. “The $1 million amount is reduced by the amount by which the cost of such properties placed in service during the taxable year exceeds $2.5 million,” according to an explanation of the new tax plan.
The provision increases the maximum amount a taxpayer can spend to $1.29 million, reduced by the amount by which the cost of qualifying property exceeds $3.22 million. The $1.29 million and $3.22 million amounts are adjusted for inflation for tax years beginning after 2024.
“The provisions related to paying off assets are exactly what is needed for someone buying a new truck or rig,” James Lucier, a tax policy expert and principal at Capital Alpha Partners, a public policy research firm, told FreightWaves . “It would be very useful for independent truckers and small trucking businesses.”
The new tax plan also extends the right to a 100% bonus depreciation deduction for properties placed in service after December 31, 2022 and before January 1, 2026. This provision is especially beneficial for owner-carriers and other small carriers, according to Barry Fowler, founder of Taxation Solutions Inc., which specializes in tax provisions affecting smaller carriers.
“If you’re thinking about buying another truck, you can take that 100% depreciation in the first year — that’s definitely a benefit,” Fowler told FreightWaves.
He noted, however, that eligibility to benefit from this provision may depend on an individual’s taxable income. “You may not want to do 100% depreciation expense if you’re in a lower tax bracket. That’s something a tax professional can help you navigate.”
The legislation, which also has bipartisan support in the Senate, has a 34% chance of being enacted, according to GovTrack.us, a nonprofit that tracks pending legislation. Only about 21 percent of bills that passed committee in the previous Congress were voted into law, according to the group.
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