Page 23 - April-May 2025

TRAILERTALK
Unite for Action, Advocate for Progress

NTDA’s Commercial Semi-Trailer Advocacy PAC

Making Progress on Floor Plan Tax Issue

There continues to be movement in the effort to make it so semi-trailer dealers can fully deduct their flooring interest. It appears that no
significant tax bills will be considered by Congress until the Budget Reconciliation process is completed. Many Representatives and Senators are
now aware of our situation, and they are sympathetic. They can see it was an oversight. The RV industry is also in a similar position and we are
speaking with the same members of Congress that are advancing the cause for that industry.

The NTDA remains open to PAC donations or for members to reach out to their Representatives and Senators. As interest rates are higher than in
the past and this could be a tougher year economically for the industry, more dealers are likely to be left in a position where they cannot deduct
all of their interest.

The NTDA formed the Commercial Semi-trailer Advocacy PAC in November 2024 so we can make sure our industry is represented in Washington,
DC. We want to be prepared to advocate for any issues that affect our industry, whether they be taxes, tariffs, trade, or other regulations.

Our initial goal is to allow our industry to be able to fully deduct interest on inventory held for sale, similar to other motor vehicle dealers. Right now,
car dealers, truck dealers, boat dealers and farm equipment dealers can deduct 100% of the interest expense to finance new and used inventory
they hold. Trailer dealers do not have the same opportunity and are limited to a 30% deduction. This results in a situation where a trailer dealer
PAC BACKGROUND: PAC
could have a loss and still have to pay taxes, which seems unfair to us. For more information, visit https://ntda.site-ym.com/page/Advocacy.

The floor plan tax deduction allows
semi-trailer dealerships to deduct
the interest on loans used to
purchase inventory, including semi-
trailers. This deduction is essential
for businesses reliant on floor plan
financing, helping them maintain adequate inventory and liquidity. However, the
2017 tax reform reduced this benefit, limiting the deduction to a 30% cap on adjusted taxable income (ATI) and denying bonus depreciation for
semi-trailer dealerships using this provision.

These changes have disproportionately impacted semi-trailer dealers, especially during economic downturns. High market interest rates have
intensified the issue, limiting semi-trailer dealers’ ability to purchase inventory, disrupting manufacturing and supply chains, and threatening jobs
across the industry.

Semi-trailer dealers face significant challenges due to the current tax code:

1. Increased Costs: The 30% cap on floor plan interest deductions raises operating costs, reducing capital for inventory and sales.
2. Cash Flow Constraints: Limited deductions strain cash flows, making it harder for businesses to maintain stock and operations.
3. Industry Disruption: Reduced inventory impacts the commercial transportation industry, increasing costs and delaying services.
4. Tax Burden Despite Losses: Semi-trailer dealers could owe taxes even during operating losses due to restrictions on deducting other
business interest expenses.
5. Decline in Inventory and Sales: Dealers are forced to reduce inventory levels due to financial constraints, leading to lower sales and
negatively impacting both their revenue and the manufacturing sector.

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