Dealer floorplan interest deductibility at risk in Senate tax bill!

The Senate Finance Committee is debating its version of tax reform this week. NADA has major concerns with the bill’s limitation on the deductibility of business interest, including floorplan interest, to 30 percent of adjustable taxable income.


NADA urges dealers to call their senators immediately to urge the Senate Finance Committee Chairman Orrin Hatch (R-UT) to preserve deductibility of floorplan financing. The House bill, which the House is considering this week, preserves full floorplan deductibility. The Washington area senators on the Finance Committee are Ben Cardin (D-MD) at 202-224-4524 and Mark Warner (D-VA) at 202-224-2023.


Here are some reasons the Senate bill should preserve 100 percent deductibility of floorplan financing:


  • Automobile dealers contribute 18 percent of total retail sales nationally, so limiting the deductibility of floorplan interest could reduce growth and threaten jobs. Reducing interest deductibility would worsen the negative economic consequence of any future downtown in the auto industry.
  • Almost 90 percent of the nation’s franchised dealerships are closely held companies. For them, floorplan financing is a necessity, not a choice. Without affordable floorplan loans, dealerships would not be able to finance sufficient inventory.
  • The limitation on interest deductibility is apparently designed for companies that choose debt over equity for tax purposes, which is not the case for franchised auto dealerships. Most dealerships are family-owned small businesses and do not have access to public equity markets.

Any dealers who have questions on tax reform can call NADA’s Legislative Affairs office at 202-547-5500.

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