The One Big Beautiful Bill Act, which President Trump signed into law in early July, dealt with a great many looming issues – not least of which were the 2017 tax cuts that would have expired at the end of this year if not made permanent by a new piece of legislation.
That they were. But as is often the case with such a broad bill, many other actions were also added. Some of them were highly sought by the logistics industry, and their inclusion in the bill has created the expectation that logistics will enjoy significant benefits from the policy changes that result.
Here are some of the key provisions, and how we see their likely impacts:
Making permanent, and expanding, the Qualified Business Income (QBI) deduction. The QBI deduction of 20 percent, which would have expired without the bill’s passage, allows trucking companies and other businesses set up as sole proprietorships, partnerships and S corporations to be protected from unfavorable tax treatment compared with large corporations. But the deduction was not only made permanent. Congress also expanded eligibility for the deduction and added an inflation-adjusted minimum deduction of $400.
The trucking industry is not the only one that benefits from the QBI deduction. But because so many trucking companies fall under this description, it should have the effect of easing operating costs for many carriers who operate on tight margins.
“This will help many carriers continue operating,” said Martin Lew, president of Commtrex. “At the same time, that could potentially preserve the overcapacity that has depressed freight rates over the past several years. It will likely benefit shippers more because it will offer more options and more competition to help keep rates down. That said, a tax break like this is not going to save a carrier that is fundamentally unsound. It will only impact market capacity at the margins by giving a boost to those who would otherwise be under pressure from high operating costs in addition to heavy tax burdens.”
Reinstatement of 100 percent depreciation on new trucks and equipment. Prior to this measure passing in 2017, depreciation of new trucks and equipment had to be spread out over a number of years. Allowing immediate 100 percent depreciation has served as an incentive for more trucking companies to invest in assets because they get the tax benefits in full right away.
“For those carriers who have the freight to haul and the drivers to haul it, investing in new equipment makes sense and 100 percent immediate depreciation will help them manage those upfront costs,” Lew said. “This will help promote more reliable performance and safety on the road. But carriers who are struggling to secure loads or retain drivers will be unlikely to benefit from this provision, since they are probably not in a position to be considering such investments.”
Expanding education savings plans to cover CDL education. Education savings plans allow money to be tucked away, tax free, to be used at a later date for various education needs. The One Big Beautiful Bill Act expands the list of approved education expenses to include the pursuit of commercial driver licenses.
“The industry is doing a lot of hard work to attract young people,” Lew said. “Trucking/logistics already has a big cost advantage compared with industries who require four-year degrees. But for those young people who might be very strapped and can’t even afford CDL training, the ability to fund from an education savings plan could make the difference in whether they choose our industry as a career. Having said that, it’s important to remember those families who can put this money away over time are probably not cash-strapped, so the impact might only be on the margins.”