Page 6 - February 2025

TRAILERTALK

Unite for Action, Advocate for Progress

NTDA’s Commercial Semi-Trailer Advocacy PAC

Working With RV Industry Association to Allow

100 Percent Deductions on Floor Plan Interest

The NTDA’s Commercial Semi-trailer Advocacy Political Action Committee (PAC) is
making progress! We are working in conjunction with the RV Industry Association
to ensure our dealers and theirs are allowed to fully deduct floor plan interest.
The RV Industry Association’s now has 18 co-sponsors for their Travel Trailer and
Camper Tax Parity Act bill. Together, we are working to establish a bill that addresses
PAC
the needs of the semi-trailer industry as well as the RV industry’s concerns.

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
PAC BACKGROUND:
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
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.

In 2018, the definition of motor vehicles was changed to include only “self-propelled vehicles,” excluding semi-trailers. This inequity leaves semi-
trailer dealers at a disadvantage compared to auto and truck dealers, despite their shared reliance on floor plan financing. Parity is essential to
ensure fair treatment 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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