Tax Policy
The tax system in the U.S. is cumbersome, unfair and overly complicated. That's why we've sought fundamental tax reform for years through policy initiatives and advocate in favor of both corporate and individual tax reform.
Why does tax policy matter to rental? Because the equipment rental industry is capital-intensive and lacks specialized tax breaks available to other industries, rental operations are very sensitive to changes in the tax code.
What's ARA doing about it? We promote pro-growth tax policies that benefit our members and members of industries that work in coalition with the equipment and event rental industry because when the economy is strong, rental operators can invest in their businesses. Investments grow businesses and benefit employees and the community by providing more jobs and local economic growth.
Federal Tax Policy
Depreciation and expensing. The Tax Cuts and Jobs Act of 2017 (TCJA) allowed businesses to depreciate 100 percent of the cost of capital in the year in which the assets were purchased and put into service. Since 2021, the amount of allowable expensing has declined by 20 percent per year and in tax year 2025, businesses will only be able to expense 20 percent of the cost of their capital assets. Read ARA’s position paper encouraging Congress to restore full and immediate expensing for investments in machines, equipment and vehicles.
Federal estate tax. Provisions in the TCJA that significantly increased the federal estate tax exemption will sunset at the end of 2025. The resulting rise in the estate tax rate could have a material effect on the ability of independent family-owned rental businesses to pass the business along to the next generation — to the point where the death of the owner could cause the business to fail. Read ARA’s position paper encouraging Congress to retain the current, lower federal estate tax exemption rate.
Section 199(A). The vast majority of ARA members are organized as pass-through entities, and as such may claim up to a 20 percent tax deduction on their share of the business’ income, with Section 199(A) of the TCJA allowing them to reinvest in their employees, fleets and facilities. Section 199(A) is set to expire on Dec. 31, 2025. Read ARA’s position paper encouraging Congress to make Section 199(A) permanent.
Corporate tax rates. The TCJA permanently lowered the tax rate for C corporations from 35 percent to 21 percent, which has boosted employment, wages and investment by equipment and event rental companies. Read ARA’s position paper encouraging Congress to keep the corporate rate at 21 percent going forward.
Section 163(j) limitation for business expense. The 163(j) interest deduction has been narrowed from EBITDA (earnings before interest, taxes, depreciation and amortization) to EBIT (earnings before interest and taxes) of 30 percent of adjusted taxable income. This reduces the amount of deductible business interest expense where the limitation applies — hindering ARA members’ ability to reinvest in their employees and businesses. Read ARA’s position paper encouraging Congress to return the 163(j) limitation to 30 percent of EBITDA.
Protect Key Tax Provisions
Energy
The ability to secure and maintain ongoing, abundant sources of energy is vital to every aspect of our civilization. Without energy, we can’t heat our homes, travel the globe or operate the equipment you rent to your customers every day.
Why does energy matter to rental? Energy exploration creates an enormous opportunity for equipment rental operations as more companies in the construction, agriculture and energy industries realize the economic advantages of renting versus buying. Larger energy reserves also mean lower prices and domestic energy production reduces imports while ensuring that we all can power our lives well into the future, which benefits all industries.
What’s ARA doing about it? Because new discoveries of shale gas, oil and other non-conventional energy sources create opportunities for our members and their businesses, we've joined the Energy Equipment and Infrastructure Alliance (EEIA) and actively support the Keystone XL pipeline project.
Labor Relations
People are every business owner's most important asset because they're what propel businesses forward. They're also the largest expense for any business — making legislation and regulations surrounding how to manage those people a major concern.
Why does labor matter to rental? Because many equipment rental businesses are seasonal, rental operators can find themselves cycling through the process of recruiting, hiring, training, retaining and letting go of employees more quickly than some other industries. This cycle can be very costly, making labor laws and regulations that much more important to members.
What’s ARA doing about it? We fight to protect rental operators and their employees from unfair labor practices through our membership in the Coalition for a Democratic Workplace (CDW).
Other Legislative Issues
Over time, numerous laws and regulations have been put in place to protect employees, customers and business owners. It's to the point that keeping up with new regulations and changes — and the paperwork that goes along with them — can be a full-time job.
Why is it important to comply? Owners and managers must be cognizant of laws and regulations on the federal, state and local levels because a violation could lead to a hefty fine, lawsuit, or accident that damages or destroys your business.
What’s ARA doing to help? We have a dedicated government affairs team, including a lobbyist in Washington, D.C., to monitor legislation on the state and federal levels that may affect the equipment rental industry. ARA has already successfully fought several battles on behalf of the industry, and continues to look out for your best interests.
State Issues
ARA works with active state associations. These associations are involved in a variety of legislative and regulatory issues that significantly impact the equipment and event rental industry.
What issues are state associations tackling? Property/inventory tax relief, equipment registration, theft of equipment rental services, inflatable regulations, ballasting and tented event regulations, lien laws and air quality regulations, among others. These groups are facilitated and coordinated through state associations, other members and ARA.
Get involved! Contact ARA to learn how it and its state associations are working together to make positive change for the rental community.