Sponsors (3)
The bill lowers operating fuel costs for qualifying coastal-trade vessels by cutting the excise tax on alternative motorboat fuel, benefiting those operators and potentially consumers, while reducing federal revenue, creating competitive tax disparities, and increasing IRS administration and compliance burdens.
Owners and operators of qualifying vessels engaged in interstate coastal trade (including routes between U.S. Atlantic/Pacific ports and U.S. territories) will pay a reduced federal excise tax on alternative motorboat fuel after Dec 31, 2025, lowering their operating fuel costs and potentially reducing shipping or passenger fares.
Federal excise tax revenue will be reduced, which could increase budget deficits or require cuts/alternative funding for programs supported by fuel tax receipts.
The measure creates a targeted tax advantage for qualifying vessel operators that could disadvantage other fuel purchasers and commercial competitors who do not meet the vessel or trade criteria.
Implementing and enforcing the exemption will add IRS administrative complexity and compliance burdens to verify vessel eligibility and interstate coastal-trade activity across ports and territories.
Based on analysis of 2 sections of legislative text.
Introduced February 12, 2025 by Lisa Murkowski · Last progress February 12, 2025
Expands an existing federal excise tax exemption for alternative marine fuels so that qualifying vessels engaged in coastwise trade between U.S. Atlantic or Pacific ports (including U.S. territories) can receive the same exemption. The change applies to fuel sold for use or used after December 31, 2025. The amendment reduces excise tax collection on certain alternative fuels used by covered vessels, affecting ship operators, fuel suppliers, and federal revenue collection and requiring updated tax guidance for enforcement and compliance.