H.R. 3450: To amend the Internal Revenue Code of 1986 to provide for special rules allowing taxpayers to deduct qualified passenger vehicle loan interest paid or accrued during the taxable year on certain indebtedness, and for other purposes.

This bill proposes changes to the Internal Revenue Code, specifically aiming to provide taxpayers with a new option regarding the deduction of interest on loans taken out for purchasing personal passenger vehicles. Here’s a breakdown of the key provisions:

No Tax on Car Loan Interest

The bill introduces special rules for tax years from 2025 through 2028, enabling taxpayers to deduct interest on certain vehicle loans without classifying it as "personal interest." Key points include:

• Qualified Passenger Vehicle Loan Interest: This refers to interest on loans secured by a first lien on a passenger vehicle intended for personal use. The loans must have been taken out after December 31, 2024.
• Exclusions: The following types of loans are not eligible:
  • Loans for buying fleet vehicles.
  • Personal cash loans secured by previously purchased vehicles.
  • Commercial vehicle loans not used for personal purposes.
  • Lease financing.
  • Loans for vehicles with salvage titles.
  • Loans for vehicles intended for scrap or parts.
• Deduction Limits: The amount of interest eligible for deduction is capped at $10,000. Additionally, for taxpayers with modified adjusted gross incomes exceeding $100,000 (or $200,000 for joint returns), the deductible amount decreases by $200 for each $1,000 over these thresholds.

Applicable Passenger Vehicle Definition

The bill defines an applicable passenger vehicle as any car, minivan, van, SUV, pickup truck, or motorcycle primarily made for public roads and highways, equipped with at least two wheels. It also includes all-terrain vehicles and certain trailers or campers, excluding those not assembled in the United States.

Deduction Characterization

Taxpayers can claim this deduction regardless of whether they itemize their deductions or take the standard deduction, aiming to simplify the process for a broader range of taxpayers.

Reporting Requirements

Individuals and businesses that receive interest income of $600 or more from applicable passenger vehicle loans in a calendar year must report this to the IRS. This includes providing detailed information such as:

• Name and address of the individual from whom the interest was received.
• Amount of interest received.
• Outstanding loan principal at the year's start.
• Vehicle information, including year, make, and model.

All relevant parties must furnish statements with similar information to the individuals whose loans were involved.

Regulatory Authority

The Secretary of the Treasury is tasked with issuing necessary regulations to enforce the bill's provisions and prevent information reporting duplications.

Effective Date

The regulations established by this bill will apply to any loans incurred after December 31, 2024.

Relevant Companies

• F - Ford Motor Company: As a major automobile manufacturer, Ford may see an increase in vehicle sales as consumers benefit from the deductible interest on loans for personal vehicles.
• TM - Toyota Motor Corporation: Similar to Ford, Toyota could experience boosted sales due to consumers being able to deduct interest payments on vehicle loans.
• GM - General Motors: With the new deduction potentially encouraging vehicle purchases, GM might benefit from higher sales volumes during the specified period.
• HMC - Honda Motor Co.: Honda could see increased demand for its vehicles from consumers taking advantage of the interest deduction on loans.