Firearms and Ammunition Excise Tax (FAET)

Firearms and Ammunition Excise Tax (FAET)

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Updated June 26, 2023
Firearms and Ammunition Excise Tax (FAET)
The federal government first imposed excise taxes on
250) and the tax rate on other firearms and ammunition was
firearms and ammunition over 100 years ago. Today,
increased to 11%. The Excise Tax Reduction Act of 1954
Section 4181 of the Internal Revenue Code imposes an
(P.L. 83-354) reduced the rate for pistols and revolvers to
excise tax at 10% of the manufacturer’s price for pistols and
10%, leading to the rates that stand today.
revolvers and 11% of the manufacturer’s price for other
firearms (rifles and shotguns), cartridges, and shells. The
FAET revenues originally went into the Treasury’s general
firearms and ammunition excise tax (FAET) is imposed on
fund, but in 1937, the Federal Aid in Wildlife Restoration
the manufacturer and importer but, as with other excise
Act (P.L. 75-415, commonly referred to as the Pittman-
taxes, is rebated on exports. Thus, the tax applies to
Robertson Wildlife Restoration Act) allocated the taxes on
firearms and ammunition for domestic use. Because the tax
other firearms (rifles and shotguns) and ammunition to the
is imposed at the manufacturer’s level, the tax is a smaller
Wildlife Restoration Trust Fund. The fund provides money
share of the retail price, because the tax base does not
to the states to support wildlife restoration and hunter safety
include additional markups. The Alcohol and Tobacco Tax
and education. In 1970, the Federal Aid in Wildlife
and Trade Bureau (TTB) administers the tax.
Restoration Act Amendments of 1970 (P.L. 91-503) also
allocated the tax on pistols and revolvers to the trust fund.
The tax does not apply to firearm parts, including frames
The connection with wildlife restoration has led to the
and receivers, but it does apply to complete but
characterization of the current excise tax on firearms and
unassembled firearms.
ammunition as a form of benefits tax, where the tax is paid
by the beneficiaries (similar to the gasoline tax, which pays
This In Focus does not discuss occupational taxes or
for highways). The link between taxpayers and
transfer and making taxes collected under the National
beneficiaries is imperfect, since some firearms and
Firearms Act (such as machine guns, short-barreled
ammunition are not used for hunting and other recreational
shotguns, and silencers). For a discussion of these taxes, see
users, such as hikers and birdwatchers, benefit from wildlife
CRS Report R45123, Guns, Excise Taxes, Wildlife
preservation. However, the link to wildlife restoration has
Restoration, and the National Firearms Act, by R. Eliot
provided support for the FAET over the years from hunting
Crafton, Jane G. Gravelle, and William J. Krouse.
and conservation groups.
Exemptions
Tax Collections
Sales to the Department of Defense and the Coast Guard,
Revenue from the tax is about equally divided between
state and local governments, nonprofit educational
pistols and revolvers, other firearms, and ammunition. The
organizations, and for use in vessels and aircraft are exempt
tax’s total yield has fluctuated depending on the economic,
from the FAET. Additionally, producers of fewer than 50
social, and political environment, and it increased
guns a year are also exempt from the excise tax. There is
substantially in 2020 and 2022. Table 1 shows the yield
also a personal-use exemption for manufacturers, importers,
and distribution of receipts for the past six years.
or producers who incidentally produce firearms and
ammunition for their own use.
Table 1. Firearms and Ammunition Excise Tax
(FAET) Revenue
History
Excise taxes on firearms and ammunition were first
Total
Pistols
imposed in 1919 in the Revenue Act of 1918 (P.L. 62-524),
Receipts
and
Other
Ammunit
as part of the tax increases associated with World War I.
Year
($millions)
Revolvers Firearms
ion
The initial rate was 10%. Although the war ended, some of
2017
$666.7
33%
33%
35%
these taxes remained. The Revenue Act of 1926 (P.L. 68-
553) eliminated the tax on long guns and ammunition,
2018
649.0
33
34
32
retaining only the tax on pistols and revolvers. The Revenue
2019
633.8
34
32
34
Act of 1928 (P.L. 75-400) eliminated these taxes as well.
The FAET, at 10%, along with other taxes, was restored by
2020
921.6
36
31
33
the Revenue Act of 1932 (P.L. 71-88), reflecting the
2021
1,223.8
36
30
34
revenue needs during the Great Depression. These early
taxes reflected a general revenue objective and were not
2022
1,085.8
32
30
37
dedicated to a specific use. The Revenue Act of 1940 (P.L.
Source: Congressional Research Service (CRS) calculations from
76-656) raised the tax rate on pistols and revolvers to 11%
Alcohol and Tobacco Tax and Trade Bureau (TTB), FOIA Electronic
for a temporary, five-year period. This temporary increase
Reading Room, Quarterly Breakdown of the Firearms and
was made permanent in the Revenue Act of 1941 (P.L. 77-
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Firearms and Ammunition Excise Tax (FAET)
Ammunition Excise Tax (FAET) Col ections, https://www.ttb.gov/foia/
In the 117th Congress, H.R. 8051, the Assault Weapons
electronic-reading-room.
Excise Act (Representative Donald S. Beyer, Jr.), would
impose an additional 1,000% excise tax on large capacity
Notes: These data reflect the amount of excise taxes col ected but
ammunition feeding devices and semi-automatic assault
not the revenue gain to the government, because excise taxes reduce
weapons. The objective of this tax is to increase the price of
the base for income taxes. The Joint Committee on Taxation typical y
these weapons to limit accessibility but stop short of a full
reduces revenues by around 25% to reflect this effect.
ban. (The sale of certain semi-automatic weapons and large
capacity magazines was banned for 10 years, beginning in
Data on receipts for earlier years is on the TTB website,
1994.)
beginning with 1991. Receipts have generally grown faster
than gross domestic product (GDP); from 1991 (the earliest
In the 116th Congress, H.R. 5717 (Representative Henry C.
year in the TTB data) to 2019, GDP grew by an average of
(Hank) Johnson, Jr.) and S. 3254 (Senator Elizabeth
4.5% whereas excise tax receipts grew by 5.8%.
Warren) would have increased the tax to 30% on firearms
and 50% on ammunition. These bills also would have
Excise taxes grew substantially in 2020 and 2021.
imposed the tax on a lower frame or receiver for a firearm,
Compared with 2019, they were 45% higher in 2020 and
whether for a semiautomatic pistol, rifle, or shotgun that is
93% larger in 2021. The increase in 2020 appears largely
designed to accommodate interchangeable upper receivers.
due to a rise in the number of firearms purchased during the
The two bills would have diverted part of the tax on
pandemic, based on the number of background checks. The
ammunition to gun violence prevention and reform.
further increase in 2021 appears largely to reflect the
Legislative proposals from earlier Congresses to increase
increase in prices. (The quantity of firearms purchased
the tax and use funds for gun violence-related purposes are
declined slightly between 2020 and 2021, but prices rose
described in CRS Report R45123, Guns, Excise Taxes,
substantially.) While these tax receipts have generally
Wildlife Restoration, and the National Firearms Act, by R.
grown faster than GDP since 1991, there are significant
Eliot Crafton, Jane G. Gravelle, and William J. Krouse.
fluctuations in receipts over time, and this higher level may
not persist. The receipts declined between 2021 and 2022,
H.R. 8167, the Repealing Excise Tax on Unalienable Rights
although ammunition taxes remained about the same, and
Now (RETURN) Act (117th Congress, Representative
the largest decline was in pistols and revolvers.
Andrew S. Clyde), would repeal the firearms and
ammunition taxes. The bill replaces the revenue for the
Legislative Proposals
Pittman-Robertson fund with revenue raised from leases by
There have been proposals to increase the excise tax and in
the Outer Continental Shelf Lands Act and the Mineral
some cases use the revenue for other purposes, with an
Leasing Act, not to exceed $800 million.
objective of reducing firearms and ammunition sales, as
well as proposals to eliminate the tax.
Jane G. Gravelle, Senior Specialist in Economic Policy
IF12173

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Firearms and Ammunition Excise Tax (FAET)

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