Senators Joni Ernst and Angus King have taken a significant step towards supporting the recreational vehicle (RV) industry. They introduced a bill addressing a critical issue in the RV sector: the unfair floor plan financing interest deductibility.
This legislative move aims to correct an oversight in the 2017 Tax Cuts and Jobs Act, which inadvertently excluded travel trailers from the definition of “motor vehicle” for this purpose.
The 2017 tax reform unintentionally created a disparity in the RV industry, particularly affecting dealers with annual sales exceeding $25 million. These dealers currently face a limitation on their net interest deduction to 30% of earnings before interest, taxes, depreciation, amortization, and depletion.
This limitation places them at a competitive disadvantage compared to dealers of motorized RVs, boats, and motorcycles, who can fully deduct interest paid on their inventory floor plans, as per the News & Insights report of the RV Industry Association (RVIA).
The RV industry is a substantial economic driver, especially in states like Iowa, where it generates almost $2 billion in economic output. Senator Ernst, the Senate RV Caucus Chairperson, highlighted the industry’s importance, noting that the bill would help this sector continue to thrive by ensuring fair treatment for all RV dealers.
Beyond its direct impact on RV dealers, the bill has broader implications for regional economies and employment. The RV industry employs thousands across the United States, and its growth is vital for the economic health of several regions, particularly those heavily invested in manufacturing and retailing RVs.
The bill has garnered bipartisan support, reflecting its importance across political lines. It is part of a series of legislative efforts aimed at supporting the RV industry, addressing issues related to trade, taxation, and industry regulations. This support underscores the recognition of the RV industry’s role in the national economy.
The RV Industry Association and other stakeholders are actively advocating for this bill. Their efforts include lobbying for changes that would benefit the entire industry, particularly in terms of tax treatment and competitiveness. The industry’s united front highlights the bill’s significance for the sector’s future.
The bill’s passage would not only benefit RV dealers but also positively impact the broader outdoor recreation industry. By ensuring fair tax treatment for all types of RVs, the bill could stimulate further growth and innovation in this sector, enhancing the overall outdoor recreational experience.
For those seeking more detailed information or wishing to engage directly with the RVIA on this legislative initiative, Samantha Rocci, senior manager of government affairs at the RVIA, can be contacted at [email protected].