S. 1653: United States Automobile Consumer Assistance and Relief Act

This bill, titled the United States Automobile Consumer Assistance and Relief Act, proposes changes to the Internal Revenue Code related to the tax treatment of interest paid on automobile loans. Here’s a summary of the key provisions of the bill:

Deduction for Qualified Automobile Interest

The bill aims to allow taxpayers to deduct interest on loans taken out for purchasing automobiles under certain conditions. The main changes include:

• Qualified Automobile Interest: The bill defines "qualified automobile interest" as interest paid or accrued during the taxable year on a loan that meets specific criteria:
• The loan must be incurred after January 1, 2025.
• The loan must be used to acquire a "qualified automobile."
• The loan must be secured by the automobile itself.
• Qualified Automobile Definition: A "qualified automobile" is defined as one that:
  • Is made by a manufacturer, with the final assembly occurring within the United States.
  • Meets the definition provided in the Automobile Information Disclosure Act.

Above-the-Line Deduction

The bill establishes that the interest deduction on qualified automobile loans would be categorized as an "above-the-line" deduction. This means that taxpayers can deduct this interest from their gross income to reduce their overall taxable income before calculating their taxes. Specifically, it states:

• This deduction applies to individual taxpayers (not corporations) and is included in the calculation of taxable income.

Effective Date

The provisions of the bill would apply to interest payments made on qualified automobile loans that are taken out on or after the date the bill is enacted.

Relevant Companies

• Ford Motor Company (F) - Ford would benefit from increased sales of vehicles due to the encouragement of consumers to buy U.S.-made vehicles with the potential for tax deductions on loans.
• Toyota Motor Corporation (TM) - While primarily a foreign manufacturer, Toyota has manufacturing plants in the U.S. and could see effects on the sale of vehicles produced there, possibly benefiting from this deduction if consumers are incentivized to purchase U.S.-assembled vehicles.
• General Motors Company (GM) - Similar to Ford, GM could see an uptick in vehicle sales due to tax incentives for buying U.S. manufactured vehicles.