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 U.S. House of Representatives with strong bipartisan support.
The Tax Relief for American Families and Workers Act of 2024, approved in the House by a vote of 357-70 on Jan. 31, allows accelerated depreciation for capital investments and provides more generous deductions for interest expenses — provisions that extend expiring benefits that were included in the 2017 Tax Cuts and Jobs Act, the signature tax bill passed by the Trump administration.
The legislation “advances several trucking priorities to promote much-needed investments in our supply chain, like restoring and extending 100% expensing for new equipment,” commented Ed Gilroy, the American Trucking Associations’ chief advocacy and public affairs officer, 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 fostering good-paying jobs in the trucking industry.”
Under current law, the maximum a taxpayer may expense 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 property 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 may expense 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 taxable years beginning after 2024.
“The provisions related to expensing assets is exactly what is needed for someone buying a new truck or rig,” James Lucier, a tax policy expert and a principal with Capital Alpha Partners, a public policy research firm, told FreightWaves. “It would be quite helpful for independent truckers and small businesses involved in trucking.”
The new tax plan also extends the allowance of a 100% bonus depreciation deduction for property placed in service after Dec. 31, 2022, and before Jan. 1, 2026. That provision is particularly beneficial for owner-operators and other small carriers, according to Barry Fowler, founder of Taxation Solutions Inc., which specializes 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 told FreightWaves.
He noted, however, that the potential for benefiting from that provision can depending on a person’s taxable income. “You may not want to take 100% depreciation expense if you’re in a lower tax bracket. That’s something a tax preparer 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 organization that tracks pending legislation. Only about 21% of bills that made it past committee in the previous Congress were enacted into law, according to the group.