Federal Ammunition Excise Tax Explained

What is it?

The Firearms and Ammunition Excise Tax (FAET) is a federal excise tax imposed on manufacturers and importers when they conduct the first sale of certain firearms, shells and cartridges in the U.S. market. Under 26 U.S.C. § 4181, the current rates are:

• 10% of the sale price for pistols and revolvers.  
• 11% of the sale price for other firearms (rifles, shotguns) and for ammunition (shells, cartridges). 
  The tax is usually administered by the Alcohol and Tobacco Tax and Trade Bureau (TTB) and applies to domestic first-sales of taxable articles.  

Who pays it — and how does it work?

Legally, the manufacturer or importer is responsible for remitting FAET upon the first taxable sale (or taxable use) of the product. The tax liability arises when the title or substantial incidents of ownership of a newly manufactured or imported firearm/ammunition are transferred to another party. 

For example: A U.S. ammunition manufacturer produces cartridges. Upon their first sale to a distributor or retailer (“first sale in U.S. commerce”), that manufacturer must accrue and pay the 11% excise tax on the sale price. This means all companies in the supply chain must account for this tax as part of their cost base. Because it’s built in at the manufacturing/import stage, the cost is folded into product pricing downstream — so although the end-consumer doesn’t see “FAET” on their receipt, it is incorporated into the cost of the product.

This structure ensures fairness: any manufacturer or importer of taxable ammunition bears the tax obligation, regardless of size (subject to specific minor exemptions). 

Why transparency matters — how we collect, calculate, submit it

At our company, we believe in full transparency regarding the FAET burden. While you won’t see a separate “FAET” line on your invoice, the tax is built into the cost of the ammunition product because the manufacturer (or importer) paid it at the first sale stage. We embed that cost into our margins and pricing to ensure our business remains compliant, competitive, and fair.

Calculation is straightforward: the FAET liability equals the applicable rate (10 % or 11 %) multiplied by the sale price of the taxable article at first sale. For instance, if a box of rifle cartridges is sold by the manufacturer for USD 100, the FAET would be USD 11 (at 11 %). The manufacturer remits that amount to TTB via the appropriate FAET tax return forms. 

Once collected, FAET payments are submitted to the federal government through TTB (or as directed) and ultimately flow into funds such as the Wildlife Restoration Trust Fund (in the case of rifles/ammo) or the general federal treasury (handguns) as originally legislated under the Pittman-Robertson framework. 

Why this benefits you, the consumer

Because we incorporate FAET into our cost structure rather than obscure it, you gain a clearer understanding of how product pricing is built — from raw materials to tax obligations to final retail markup. This helps maintain consistent margins and ensures that while you receive high-quality ammunition, we remain fully compliant. In short: you get the product you expect, with the tax obligation properly handled, none of which is hidden in surprise fees later.

— Joshua Dace, Co-Founder

Chalk 1 Munitions®