Over the past several years, the RV Dealers Association (RVDA) has been a vocal advocate for securing fair and consistent tax treatment for dealers who finance towable RV inventory. Their efforts have finally paid off with a key amendment to the Internal Revenue Code, which was made possible by the One Big Beautiful Bill tax act passed by Congress and signed into law by President Trump in 2025.
The statutory change expanded the definition of 'floor plan financing indebtedness' to include loans used to finance trailers and campers designed for temporary living and towable by a motor vehicle. This means that dealers who use floor plan financing to purchase towable RVs can now deduct interest on these loans under Section 163(j), eliminating the previous 30 percent limitation.
The IRS has confirmed that towable RVs used for recreational, camping, or seasonal living are now explicitly included in the category of 'motor vehicle' for purposes of interest deductibility. This change is a major step forward for dealers who rely on floor plan financing to manage their inventory and meet consumer demand.
As a result of this change, dealers can now deduct interest on qualifying floor plan loans for towable inventory without worrying about the previous 30 percent limitation. This will have a significant impact on the financial health of many RV dealerships.
The IRS has also reaffirmed that depreciation, amortization, and depletion may once again be added back when calculating Adjusted Taxable Income (ATI), restoring a more favorable EBITDA-based calculation. This change provides additional relief for many dealers and aligns with the intent of Congress when it adopted the 2025 amendment.
However, there are still some important considerations that dealers need to be aware of. Businesses that benefit from the floor plan interest addback may face restrictions on claiming bonus depreciation under Section 168(k), depending on whether they actually receive a benefit from the provision.
Dealers with average annual gross receipts below the inflation-adjusted $31 million threshold remain exempt from Section 163(j) limitations altogether and may continue to qualify for bonus depreciation regardless of floor plan financing. This means that smaller dealerships will not be affected by these new rules.
The IRS has also released Notice 2025-57, offering transitional relief related to information reporting for certain qualified automobile loan interest received in 2025. While this notice is not specific to RV floor plan financing, it may be relevant for dealers engaged in vehicle financing transactions.
Overall, this change is a significant win for the RV industry and reflects the value of advocacy efforts by organizations like the RVDA. Dealers who rely on floor plan financing will now have more flexibility and relief when it comes to deducting interest on their loans.
This change provides significant relief to dealers who rely on floor plan financing to manage their inventory and meet consumer demand. The new rules align with Congress's intent when they adopted the 2025 amendment.
