Less-Lethal Devices Get Tax Break, NFA Exemption: What the 500 FPS Rule Means for Manufacturers

This bill, officially dubbed the Innovate Less Lethal to De-Escalate Tax Modernization Act, is all about changing how the government regulates and taxes certain non-lethal projectile devices. In short, it creates a significant tax exemption for manufacturers of these specific devices and their ammunition, and perhaps more importantly, it pulls them out from under the heavy regulatory thumb of the National Firearms Act (NFA).

The Tax Break and the Speed Limit

Section 2 of the Act is where the money changes hands—or rather, where it doesn't. It exempts qualifying less-than-lethal devices and their shells or cartridges from the federal excise tax normally applied to firearms and ammunition. This is a massive win for manufacturers, producers, and importers in that space. But to get this break, a device has to meet some pretty strict technical specs. The big one? It can't shoot faster than 500 feet per second (FPS). It also can’t be designed to use standard handgun or rifle ammo, and it can't use the kind of ammunition feeding devices commonly found in semi-automatic firearms (like those that load through the pistol grip). If you’re a company making these, you can ask the Secretary for an official ruling, who then has 90 days to decide if your device qualifies for the tax exemption. The Secretary has to keep a public list of all approved devices and update it annually.

Escaping the NFA Red Tape

Section 3 addresses the regulatory side, which might be even more impactful for innovation. It removes these qualifying less-than-lethal devices from the jurisdiction of the National Firearms Act (NFA). The NFA is the law that regulates things like machine guns and short-barreled rifles, requiring special registration, high taxes, and extensive paperwork. By exempting these de-escalation tools, the bill essentially makes it easier and cheaper for companies to develop and distribute them without having to navigate that intense federal bureaucracy. For the average person, this could mean these less-lethal tools become more accessible to entities like private security firms or even potentially individual consumers, depending on state laws.

The Real-World Friction Points

While the goal of encouraging less-lethal technology is solid, the implementation relies heavily on the Secretary (likely Treasury/ATF) making some tough calls. The law requires the device to be "intended for use in a way that probably won't cause death or serious injury." That phrase is a little squishy and relies on interpretation. If a manufacturer builds a device that shoots at 499 FPS, they get the tax break and NFA exemption, but if they build one at 501 FPS, they don't. The Secretary must also maintain a separate public list of devices that almost qualify but miss the mark, specifically because they exceed that 500 FPS limit. This creates a regulatory tightrope walk for manufacturers and a potential administrative headache for the government, complete with annual reports to Congress.

For taxpayers, the immediate impact is a loss of federal excise tax revenue, which is a trade-off for promoting this specific technology sector. The bigger question is whether removing the NFA oversight—which is a major layer of federal scrutiny—is appropriate for devices that, while intended to be less-lethal, still rely on projectile force. The accuracy of the Secretary’s public lists and rulings will be crucial, as any ambiguity could be exploited by companies looking to shave costs or avoid regulation on devices that might still pose a serious risk.