A federal tax reconciliation bill approved at the United States Capitol includes an amendment to Internal Revenue Code Section 163(j) that expands floor plan financing treatment to certain travel trailers and campers, allowing qualifying RV dealers to fully deduct related interest expenses.
The amendment broadens the definition of floor plan “financing indebtedness” to cover debt used to finance trailers or campers designed to provide temporary living quarters for recreational, camping or seasonal use and designed to be towed by or affixed to a motor vehicle.
The change directly affects dealerships that sell towable recreational vehicles, including fifth-wheel trailers and travel campers.
Under prior rules, those towable units were generally excluded from the floor plan financing exception unless they could be considered part of a motor vehicle package.
As a result, interest tied to their inventory financing could fall under business interest limitation rules. The revised definition brings those products into the exception, making interest on qualifying inventory financing fully deductible and not subject to the Section 163(j) limitation.
According to a press release, the provision followed advocacy efforts by dealers and manufacturers. The measure was supported by the Recreation Vehicle Dealers Association and the Recreation Vehicle Industry Association (RVIA), along with dealership stakeholders.
The legislative provision was championed in the House by Rep. Rudy Yakym, a member of the Ways and Means Committee.
In the Senate, companion legislation was supported by Sen. Joni Ernst, Sen. Todd Young and Sen. Jim Banks to align tax treatment for RV dealers.
According to the bill language, the amendment applies to tax years beginning after December 31, 2024. The U.S. Treasury Department is authorized to issue rules addressing short tax years that span the enactment date.