Sponsors (3)
Official title: Amend the Internal Revenue Code of 1986 to extend the exemption from the excise tax on alternative motorboat fuels sold as supplies for vessels or aircraft to include certain vessels serving only one coast.
Introduced February 12, 2025 by Lisa Murkowski · Last progress February 12, 2025
The bill gives targeted fuel tax relief to certain Atlantic/Pacific vessel operators to lower their operating and shipping costs, at the expense of reduced federal revenue and a potentially unequal tax treatment among fuel users.
Owners and operators of qualifying vessels engaged in Atlantic and Pacific trade will pay reduced federal fuel excise taxes on specified alternative motorboat fuels beginning in 2026, directly lowering their fuel expenses.
Businesses that rely on covered Atlantic/Pacific vessel routes (including small shippers and cargo customers) may see lower shipping or transport costs as vessel operators' fuel costs decline.
All taxpayers will face reduced federal excise tax receipts from this exemption, which could increase budgetary pressure and might force spending cuts or require revenue to be raised elsewhere.
Small-business owners and other fuel consumers may be disadvantaged by an unequal tax treatment that gives certain vessel owners/operators a selective benefit, potentially distorting competition and appearing unfair.
Based on analysis of 2 sections of legislative text.
Extends a federal excise-tax exemption for certain alternative motorboat fuels to qualifying vessels engaged in Atlantic or Pacific U.S. port-to-port trade.
Extends a federal excise-tax exemption for certain alternative motorboat fuels to cover fuel sold for use (or used) by qualifying vessels engaged in trade between U.S. Atlantic or Pacific ports, including territories and possessions. The change amends 26 U.S.C. § 4041 to add this specific maritime use and applies to fuel sold or used after December 31, 2025 (effective January 1, 2026).