Truck FET: How to Calculate It
Truck federal excise tax comes down to one line of math: tax base times 12%, with a separate credit for the tires. On the made-up tractor sale below, a $168,500 base produces $20,220.00 of tax and a $170.10 tire credit, for a net cost of $20,049.90.
This page is about the numbers. If you first need to know which vehicles are taxed and what the weight limits are, read the 12% heavy truck excise tax overview, then come back. All names and amounts in the examples are invented for illustration.
Step 1: What goes into the tax base?
The IRS calls this the tax base: the amount the 12% is figured on. For a sale by a dealer, it starts with the total consideration paid for the item, including any charge for putting it in a condition ready for use. Publication 510 then removes certain items.
| Item on the deal | In the base? | Why |
|---|---|---|
| Agreed price, including any trade-in allowance | Yes | Total consideration paid |
| Charges to make the truck ready for use | Yes | Incident to placing it in a ready condition |
| Parts and accessories ordered when the truck is sold | Yes | Sold on or in connection with the sale, however they are billed |
| The 12% retail excise tax | No | Excluded by Pub. 510 |
| State or local retail sales tax, stated as a separate charge | No | Excluded by Pub. 510 |
| Transportation, delivery, and insurance from the dealer to the customer | No | Delivery expenses are excluded |
| An EPA-determined idling reduction device, or insulation rated at least R35 per inch | No | The tax on parts and accessories does not apply to them |
| Machinery that does not contribute to the highway transportation function | No, with adequate records | For example, the vacuum pump and hose on an industrial vacuum loader |
A dealer sale of a tractor, line by line
Harbor Truck Sales (invented) makes the first retail sale of a new highway tractor. The price is $165,000: the buyer pays $125,000 in cash and gets a $40,000 trade-in allowance. A fifth wheel is ordered with the tractor. So is an idling reduction device that meets the EPA requirement.
| Deal item | Amount | Tax base |
|---|---|---|
| Tractor price (cash plus trade-in allowance) | $165,000.00 | $165,000.00 |
| Fifth wheel ordered with the tractor | $3,500.00 | $3,500.00 |
| Qualifying idling reduction device | $11,000.00 | $0.00 |
| Delivery from the dealer to the customer | $900.00 | $0.00 |
| State sales tax, stated separately | $4,000.00 | $0.00 |
| Tax base | $168,500.00 | |
| Tax at 12% (IRS No. 33) | $20,220.00 |
Step 2: How much is the tire credit?
Tires carry their own federal tax, imposed when the manufacturer, producer, or importer sells them. When taxable tires are sold with the truck, the seller can claim a credit equal to the tax imposed on those tires. This is the section 4051(d) credit, explained in more detail in our tire credit guide.
The tire rate for most highway tires (IRS No. 108) is $.0945 for each 10 pounds of maximum rated load capacity over 3,500 pounds. Say the tractor has 10 such tires, each rated at 5,300 pounds:
| Step | Math | Result |
|---|---|---|
| Capacity over 3,500 lbs | 5,300 - 3,500 | 1,800 lbs |
| 10-pound units | 1,800 / 10 | 180 |
| Tax per tire | 180 x $.0945 | $17.01 |
| Credit for 10 tires | 10 x $17.01 | $170.10 |
| Tax after credit | $20,220.00 - $170.10 | $20,049.90 |
Tire type changes this. A bias ply tire or a super single tire not designed for steering uses half the rate, $.04725. The same 5,300-pound rating would then carry $8.505 per tire.
Four situations that change the number
| Situation | Rule | Math on invented figures |
|---|---|---|
| Manufacturer sells a new truck or tractor directly to the user | Add the 4% presumed markup to the sales price | $165,000 x 1.04 = $171,600 base; 12% = $20,592.00 |
| Remanufactured truck or tractor, sold by the manufacturer | Presumed markup is zero | $165,000 x 12% = $19,800.00 |
| Vacuum truck with non-highway equipment, with records to support it | Exclude the equipment | $310,000 - $90,000 = $220,000 base; 12% = $26,400.00 |
| First retail sale paid in installments | Tax arises at the sale, on the entire price | $165,000 x 12% = $19,800.00 at the time of sale, with nothing deferred |
There is one more trap, for parts added after delivery. If the owner, lessee, or operator installs parts and accessories within 6 months after the vehicle is first placed in service, the tax applies once their total price, including installation, is more than $1,000. Replacement parts do not count.
The IRS example: a vehicle goes into service April 8. Parts costing $850 are installed on May 3, and $300 more on July 15. The total is now $1,150, so $138 of tax (12% of $1,150) applies on July 15, not just tax on the $150 above the limit. Further parts installed before October 8 are taxed too.
Where these numbers go on Form 720
Figure the tax for each vehicle and enter the total for the quarter on the line for IRS No. 33. That line is in Part I of the form, so three things follow:
| Figure | Where it goes | Amount from the example |
|---|---|---|
| 12% tax for the quarter | Part I, IRS No. 33 | $20,220.00 |
| Tire credit | Schedule C, line 14a (CRN 366), which reaches Part III, line 4 through the Schedule C total | $170.10 |
| Net liability for the semimonthly period | Schedule A | $20,049.90 |
Deposits catch new dealers out. Semimonthly deposits are generally required unless your net liability for Part I taxes is $2,500 or less for the quarter, and one heavy truck will pass that. The deposit for a semimonthly period must be at least 95% of the net liability for that period, unless the safe harbor rule applies. If this were the only sale in that period, 95% of $20,049.90 is $19,047.41, rounded up to the cent.
Turning your figures into a filed return
Try your own deal first in the truck excise tax calculator. Keep your worksheet: the base is yours to determine, and the IRS expects records that support any claim or exemption.
When you are ready to report, file the truck excise tax with EasyFile720, an IRS-authorized e-file provider for Form 720. The guided steps run from your business details through to submission and cover Part I and Schedules A and C. You enter your figures, the rates are built in, and the math is calculated for you. Validations catch common mistakes before you submit.
An account is free to create with no credit card. You pay $39.95 when you file, or see the pricing page for the Full Year Plan if your dealership reports every quarter.
FAQ
Do I charge the 12% on a price that already includes the 12%?▼
No. Publication 510 tells you to exclude the retail excise tax itself from the tax base, so the tax is not figured on top of itself.
Does a trade-in lower truck FET?▼
No. The price is the total consideration paid, and the IRS says that includes any trade-in allowance. A $40,000 trade-in allowance counts the same as $40,000 in cash.
Is the tire credit taken off the sales price?▼
No. It is a credit, not a change to the base. You report the full 12% on IRS No. 33 and claim the credit on Schedule C, line 14a, for the same quarter.
What if the invoice has one lump price with non-highway equipment in it?▼
Publication 510 lets you exclude amounts charged for machinery that does not contribute to the highway transportation function only if those charges are supported by adequate records. Without records to support the split, plan on the full price being in the base.
File the truck excise tax online
Create a free account with no credit card and build your return. You pay $39.95 only when you file. EasyFile720 is an IRS-authorized e-file provider, and you get an acknowledgment when the IRS accepts your return.
Sources: Instructions for Form 720 (Rev. June 2026); Form 720 (Rev. June 2026); IRS Publication 510 (Rev. December 2025). General information, not tax advice. Confirm how the rules apply to you with a qualified advisor or the IRS.
