What Exactly is the Federal Excise Tax (FET)?
2. Breaking Down the Basics
Okay, let’s get down to brass tacks. The Federal Excise Tax (FET) is a tax levied on the first retail sale of certain heavy-duty trucks, trailers, and tractors. “First retail sale” is key here. It means the first time the vehicle is sold to someone who will actually use it, rather than resell it.
Think of it like this: when a manufacturer builds a new truck, they don’t pay the FET. It’s the dealer, when they sell that truck to, say, Joe the trucker, who is responsible for collecting and remitting the tax to the government. So, Joe, essentially ends up paying for the FET.
The tax rate is currently 12% of the retail price. Yes, you read that right. Twelve percent. On a brand-new semi-truck, that’s a significant chunk of change. That’s why it’s so crucial to factor this tax into your budgeting when you’re thinking about purchasing a new vehicle. Don’t let it blindside you!
Its designed to help fund highway construction and maintenance, reflecting the impact heavy vehicles have on road infrastructure. In essence, its a user fee that helps ensure the roads are kept in good condition for everyone, including (and especially) those big rigs.