Senate Unveils Initial Tax Package Without Electric Vehicle Fee

What happened: The Senate Finance Committee June 16 released details of the tax and healthcare components of the GOP reconciliation package. The package did not include a House-passed provision to enact user fees on electric and hybrid vehicles, which would go into the Highway Trust Fund (HTF).

While the provision is broadly supported by the Senate GOP Conference, ARTBA learned the House language may have violated Senate-specific rules on reconciliation bills, a procedure which allows them to bypass the 60-vote filibuster threshold.

The Finance Committee’s package did propose a number of business tax changes, including:

• Bonus depreciation: Would allow 100 percent bonus depreciation of property and equipment placed into service for the next ten years.  The House version of the bill had similar language, but only for four years;
• R&D: Permits companies to deduct domestic research and development (R&D) costs or capitalize and recover expenses over 10 years. The Senate provision would last for ten years while the House bill allows business to take advantage of the credit through Dec. 31, 2029; and
• Accelerated depreciation for factories: Allows 100 percent expensing of construction for new factories, up from 10 percent amortization, and certain improvements to existing facilities. Both the House and Senate measures call for construction to begin between Jan. 19, 2025 and Jan. 1, 2029 and be placed into service by Dec. 31, 2033.

Why it matters: Finding a path forward for electric and hybrid fees is a critical step in helping to ensure all road users pay for maintenance and upkeep. If enacted, the fees would be the first user-based revenue enhancement for federal highway and public transportation programs in over two decades.

What’s next: ARTBA continues to work with Senate supporters of the user fees to find a way forward within the chamber’s reconciliation rules and will keep members apprised of developments and opportunities to engage their congressional delegation.