US industry lobbies on tax breaks for electric machines

US equipment and rental associations as well as prominent OEMs have written to US tax authorities urging the inclusion of electric or ‘clean’ construction equipment in the tax breaks offered under the 45W Commercial Vehicle Credit measures.

The American Rental Association (ARA), manufacturer body AEM, distributors association AED, along with CNH, Volvo Group North America and other suppliers and users, wrote to US secretary of the treasury Janet Yellen asking the IRS to adopt “a more inclusive definition of eligibility as clearly intended by Congress”.

A Volvo excavator working on Little Brewster Island in Massachusetts Bay, USA, in early December. (Photo: USA Today Network, Reuters Connect)

The group said many manufacturers had been denied prequalification for 45W on the basis that their equipment did not meet the definition of mobile machinery in the Act.

The tax measures were introduced as part of the Inflation Reduction Act (IRA) of 2022.

“Failure to take action ensuring 45W credit eligibility for off-road vehicles will result in a drastic reduction in the climate benefits of the credit”, said the letter.

“The current emissions impacts of mobile machinery and equipment are significant and the decarbonization of this product category should be a priority.

“For these reasons we strongly urge you to change course and adopt new guidance to allow off-road vehicles to qualify as eligible equipment for the 45W tax credit.”

More than 30 members of the US senate and US House of Representatives have also written to Janet Yelland supporting the claims of the associations and OEMs.

Speaking to ARA’s Rental Management magazine, Matthew Hite, ARA vice president, federal advocacy, said; “This is a very strong bicameral letter with Congressional leaders in both the House and Senate specifically telling Treasury to follow the legislative intent in the IRA and include off-road commercial vehicles in 45W.

“This letter will be a big help to ARA and the coalition we are working with on 45W in our efforts to get this right.”