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Extends the federal excise tax exemption for certain alternative motorboat fuels so it also applies to fuel sold or used by qualifying vessels that are actually engaged in trade between Atlantic or Pacific ports of the United States (including U.S. territories and possessions). The change applies to fuel sales after December 31, 2023. The amendment lowers fuel costs for eligible vessels and their operators, may encourage use of alternative marine fuels, and reduces federal excise tax receipts to the extent the exemption is claimed.
Adds a sentence to the Internal Revenue Code (section 4041(g)) stating that, for purposes of subsection (a)(2), the exemption under paragraph (1) also applies to fuel sold or used by a vessel that (1) is described in section 4042(c)(1) and (2) is actually engaged in trade between Atlantic or Pacific ports of the United States, including any territory or possession of the United States.
Specifies the effective date: the amendment applies to sales after December 31, 2023.
Primary affected parties are commercial vessel owners and operators that meet the statute's vessel criteria and operate in trade between U.S. Atlantic or Pacific ports (including territories). Those operators can claim an excise tax exemption on qualifying alternative motorboat fuels sold or used on covered voyages, lowering operating fuel costs and potentially making alternative fuels more competitive. Marine fuel suppliers that sell eligible fuels to these vessels will see demand subject to the exemption and may need to adapt billing/recordkeeping for tax-exempt sales. The federal government will see reduced excise tax receipts for fuel sales that qualify under the expanded rule; the revenue effect depends on how many vessels and transactions fall within the expanded scope. The change is narrowly targeted and does not alter broader maritime regulation or create new programs—administrative action will primarily be limited to tax compliance and validation that vessels meet the preexisting eligibility criteria and route requirements.
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Referred to the House Committee on Ways and Means.
Introduced April 17, 2025 by Aaron Bean · Last progress April 17, 2025
Referred to the House Committee on Ways and Means.
Introduced in House