CQ Roll Call: Transportation Tax Break

Transportation Tax Break 
CQ Roll Call
By Laura Weiss
November 2, 2021

Dozens of House members from both parties are asking leadership for legislation making pandemic relief grants for the transportation sector tax-free.

In a letter to Pelosi and House Minority Leader Kevin McCarthy, R-Calif., 93 lawmakers sought to exempt from taxes COVID-19 grants for transportation services companies. Democrats Jimmy Panetta of California and Albio Sires of New Jersey along with Republicans Darin LaHood of Illinois and John W. Rose of Tennessee led the letter.

The members ask that leadership add the language in the “first available legislative vehicle,” saying the measure would ensure that aid to motorcoach, school bus, passenger vessels and other services whose business was stifled by the pandemic are treated similarly to some other hard-hit sectors.

The measure, if passed, would make up to $2 billion in grants — signed into law in December 2020 and intended to largely cover payroll — exempt from federal tax while preserving the ability for companies to deduct normal business expenses.

That's the same tax treatment provided to other aid to small businesses, restaurants and venues like museums and theaters, the House members say, describing the different treatment of transportation services providers as an oversight. Government grants to businesses are generally treated as taxable income, and other COVID-19 grants are taxable, though some are explicitly exempt.

Panetta, in a statement to CQ Roll Call, said motorcoach and passenger vessels are a cornerstone of his district's tourism and hospitality industries, which are struggling to rebound from the pandemic. “A tax exemption for those specific relief grants would strengthen the foundation not just for the survival of the motorcoach and passenger vessel industry, but also for its continued success as an important part of our community and economy,” he said.