H.R. 2981: United States Automobile Consumer Assistance and Relief Act

This bill, titled the "United States Automobile Consumer Assistance and Relief Act" or the "USA CAR Act," aims to make amendments to the Internal Revenue Code regarding the deductibility of interest on certain automobile loans. Here are the key points:

Deduction for Automobile Loan Interest

The main purpose of the bill is to allow individuals to deduct interest paid on loans used to purchase qualified automobiles from their taxable income. This is a change from existing tax law that may limit or exclude such deductions for certain automobile loans.

Definition of Qualified Automobile Interest

The bill specifies what qualifies as "qualified automobile interest." This includes:

• The interest that is paid or accrued during the taxable year on a loan.
• The loan must be incurred on or after January 1, 2025.
• The loan must be used to acquire a "qualified automobile." This means the vehicle must be made by a manufacturer, with final assembly occurring in the United States.
• The loan must be secured by the automobile being purchased.

Definition of Qualified Automobile

A "qualified automobile" is defined as a vehicle that meets specific criteria, including:

• It is an automobile as defined under the Automobile Information Disclosure Act.
• It is manufactured by a company that conducts the final assembly of the vehicle in the United States.

Effective Date

The provisions in this bill would apply to amounts paid or accrued on qualifying loans that are incurred on or after January 1, 2025.

Relevant Companies

• Ford Motor Company (F) - Ford vehicles would qualify under the new deduction provisions, which could lead to increased sales if consumers find the tax benefit appealing.
• Toyota Motor Corporation (TM) - As a major manufacturer with production in the U.S., Toyota vehicles would also fall under the qualified automobile category, potentially increasing demand.
• General Motors Company (GM) - Similar to Ford and Toyota, GM's U.S. manufactured automobiles would be impacted by this bill, possibly driving up sales due to tax incentives.
• Honda Motor Co. Ltd (HMC) - With its plants in the U.S., Honda would have vehicles qualifying for the interest deduction as well.