12% Federal Excise Tax on Trucks

Every heavy-truck dealer knows the 12% FET; most buyers meet it as an unexplained five-figure line on a sales invoice. Publication 510 states the rule: "A tax of 12% of the sales price is imposed on the first retail sale" of heavy truck chassis and bodies, trailer and semitrailer chassis and bodies, and highway tractors — including related parts and accessories sold with them.

Here are the thresholds, the six-month installation rule that catches upfitters, the exemptions, and the FET-versus-2290 distinction that confuses everyone at least once.

What is taxed — the weight thresholds

The 12% applies above specific gross vehicle weight lines, and Publication 510 draws them precisely: the tax does not apply to truck chassis and bodies suitable for use with a vehicle of 33,000 pounds GVW or less, nor to trailer and semitrailer chassis and bodies suitable for a trailer of 26,000 pounds GVW or less. Tractors are taxable except the carve-out for those with a GVW of 19,500 pounds or less AND a gross combined weight of 33,000 pounds or less.

GVW here means the maximum total loaded weight — generally the manufacturer’s rating based on chassis strength and axle capacity. Certain body types are deemed non-taxable by size under the "suitable for use" standard: platform bodies 21 feet or less, dry freight and refrigerated van bodies 24 feet or less, dump bodies 8 cubic yards or less, and refuse packer bodies 20 cubic yards or less.

Who pays, and on what

The seller making the first retail sale is liable and reports the tax on Form 720 under IRS No. 33. The taxable base is the sales price including parts and accessories sold with the unit — "whether or not the retailer bills the parts or accessories separately." A long-term lease (a year or more) before any retail sale counts as a taxable sale by the lessor, and a tax-paid trailer resold within six months can trigger the tax again, with credit for the tax already paid.

The six-month parts rule

The FET follows the truck for half a year. If the owner, lessee, or operator installs parts or accessories on a taxable vehicle within six months after it is first placed in service, the tax applies to the parts and installation — with two outs: replacement parts don’t count, and neither does a total of $1,000 or less for the six-month period. Cross the $1,000 line, though, and the 12% applies to the ENTIRE running total, not just the excess.

Publication 510’s own example: $850 of accessories installed in May plus $300 more in July puts the six-month total at $1,150, and a $138 tax (12% of the full $1,150) attaches with the July installation. The vehicle’s owner is primarily liable; the installing shop is secondarily liable. Exemptions exist for idling-reduction devices and heavy insulation (R35-plus per inch).

Repairs and modifications to used units don’t restart the tax unless the work exceeds 75% of the retail price of a comparable new article — the line between fixing a truck and manufacturing one.

Exempt sales and credits

Sales for export, to state and local governments for their exclusive use, for resale, and for qualifying long-term lease escape the tax with proper certificates. Specific articles are exempt outright — house trailers, ambulances and hearses, concrete mixer bodies, farm feed/seed/fertilizer bodies, and camper units among them. Sellers also get a credit against the 12% for the tire excise tax already paid on taxable tires sold with the vehicle, claimed on Form 720 Schedule C.

FET vs. Form 2290: two different taxes

The 12% FET and the Form 2290 highway use tax hit the same trucks and get confused constantly. The FET is a ONE-TIME tax on the first retail sale, owed by the seller, at 12% of price, on Form 720. The 2290 tax is an ANNUAL use tax on vehicles with a taxable gross weight of 55,000 pounds or more, owed by the person who registers the vehicle, for each July-through-June period. A new 80,000-pound tractor generates both: FET once at the dealership, then Form 2290 every year it operates.

Frequently asked questions

Who actually pays the 12% truck FET — buyer or dealer?⌄

The seller is legally liable and files it on Form 720, IRS No. 33 — but commercially the tax is priced into the invoice, so the buyer funds it. Either way it attaches only once, at the first retail sale.

Which vehicles are subject to the FET?⌄

Truck chassis and bodies suitable for vehicles over 33,000 pounds GVW, trailer and semitrailer chassis and bodies over 26,000 pounds GVW, and highway tractors — except tractors at or under 19,500 pounds GVW with gross combined weight at or under 33,000 pounds.

Does adding equipment to a new truck trigger more FET?⌄

It can. Parts and accessories installed within six months after the vehicle first enters service are taxable once the six-month total passes $1,000 — and then the 12% applies to the whole amount, installation charges included. Replacement parts are excluded.

Is the FET the same as the Form 2290 heavy vehicle tax?⌄

No. The FET is a one-time 12% tax on the first retail sale, paid by the seller on Form 720. Form 2290 is the annual highway use tax on 55,000-pound-plus vehicles, paid by the registrant for each July 1 – June 30 period. The same truck can owe both — once and yearly, respectively.

Are any truck sales exempt from the FET?⌄

Yes — export sales, sales to state and local governments for exclusive use, resale and qualifying long-term-lease sales with certificates, and specific exempt articles like ambulances, house trailers, and concrete mixer bodies. Documentation is what keeps an exempt sale exempt.

Related guides

Official sources

Tax rules, rates and deadlines change — verify current requirements against the IRS sources above before acting. This guide is general information, not tax or legal advice.

The 12% Federal Excise Tax on Heavy Trucks and Trailers