[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3450 Introduced in House (IH)]
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119th CONGRESS
1st Session
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.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 15, 2025
Mr. Kelly of Pennsylvania (for himself and Mr. Huizenga) introduced the
following bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. NO TAX ON CAR LOAN INTEREST.
(a) In General.--Section 163(h) of the Internal Revenue Code of
1986 is amended by redesignating paragraph (4) as paragraph (5) and by
inserting after paragraph (3) the following new paragraph:
``(4) Special rules for taxable years 2024 through 2028
relating to qualified passenger vehicle loan interest.--
``(A) In general.--In the case of taxable years
beginning after December 31, 2024, and before January
1, 2029, for purposes of this subsection the term
`personal interest' shall not include qualified
passenger vehicle loan interest.
``(B) Qualified passenger vehicle loan interest
defined.--
``(i) In general.--For purposes of this
paragraph, the term `qualified passenger
vehicle loan interest' means any interest which
is paid or accrued during the taxable year on
indebtedness incurred by the taxpayer after
December 31, 2024, for the purchase of, and
that is secured by a first lien on, an
applicable passenger vehicle for personal use.
``(ii) Exceptions.--Such term shall not
include any amount paid or incurred on any of
the following:
``(I) A loan to finance fleet
sales.
``(II) A personal cash loan secured
by a vehicle previously purchased by
the taxpayer.
``(III) A loan incurred for the
purchase of a commercial vehicle that
is not used for personal purposes.
``(IV) Any lease financing.
``(V) A loan to finance the
purchase of a vehicle with a salvage
title.
``(VI) A loan to finance the
purchase of a vehicle intended to be
used for scrap or parts.
``(C) Limitations.--
``(i) Dollar limit.--The amount of interest
taken into account by a taxpayer under
subparagraph (B) for any taxable year shall not
exceed $10,000.
``(ii) Limitation based on modified
adjusted gross income.--
``(I) In general.--The amount which
is otherwise allowable as a deduction
under subsection (a) as qualified
passenger vehicle loan interest
(determined without regard to this
clause and after the application of
clause (i)) shall be reduced (but not
below zero) by $200 for each $1,000 (or
portion thereof) by which the modified
adjusted gross income of the taxpayer
for the taxable year exceeds $100,000
($200,000 in the case of a joint
return).
``(II) Modified adjusted gross
income.--For purposes of this clause,
the term `modified adjusted gross
income' means the adjusted gross income
of the taxpayer for the taxable year
increased by any amount excluded from
gross income under section 911, 931, or
933.
``(D) Applicable passenger vehicle.--The term
`applicable passenger vehicle' means any vehicle--
``(i)(I) which is manufactured primarily
for use on public streets, roads, and highways,
``(II) which has at least 2 wheels, and
``(III) which is a car, minivan, van, sport
utility vehicle, pickup truck, or motorcycle,
``(ii) which is an all-terrain vehicle
(designed for use on land), or
``(iii) any trailer, camper, or vehicle
(designed for use on land) which--
``(I) is designed to provide
temporary living quarters for
recreational, camping, or seasonal use,
and
``(II) is a motor vehicle or is
designed to be towed by, or affixed to,
a motor vehicle.
Such term shall not include any vehicle the final
assembly of which did not occur within the United
States.
``(E) Other definitions and special rules.--For
purposes of this paragraph--
``(i) All-terrain vehicle.--The term `all-
terrain vehicle' means any motorized vehicle
which has 3 or 4 wheels, a seat designed to be
straddled by the operator, and handlebars for
steering control.
``(ii) Final assembly.--For purposes of
subparagraph (D), the term `final assembly'
means the process by which a manufacturer
produces a vehicle at, or through the use of, a
plant, factory, or other place from which the
vehicle is delivered to a dealer or importer
with all component parts necessary for the
mechanical operation of the vehicle included
with the vehicle, whether or not the component
parts are permanently installed in or on the
vehicle.
``(iii) Treatment of refinancing.--
Indebtedness described in subparagraph (B)
shall include indebtedness that results from
refinancing any indebtedness described in such
subparagraph, and that is secured by a first
lien on the applicable passenger vehicle with
respect to which the refinanced indebtedness
was incurred, but only to the extent the amount
of such resulting indebtedness does not exceed
the amount of such refinanced indebtedness.
``(iv) Related parties.--Indebtedness
described in subparagraph (B) shall not include
any indebtedness owed to a person who is
related (within the meaning of section 267(b)
or 707(b)(1)) to the taxpayer.''.
(b) Deduction Allowed Whether or Not Taxpayer Itemizes.--Section
62(a) of such Code is amended by inserting after paragraph (21) the
following new paragraph:
``(22) Qualified passenger vehicle loan interest.--So much
of the deduction allowed by section 163(a) as is attributable
to the exception under section 163(h)(4)(A).''.
(c) Reporting.--Subpart B of part III of subchapter A of chapter 61
of such Code is amended by adding at the end the following new section:
``SEC. 6050AA. RETURNS RELATING TO APPLICABLE PASSENGER VEHICLE LOAN
INTEREST RECEIVED IN TRADE OR BUSINESS FROM INDIVIDUALS.
``(a) In General.--Any person--
``(1) who is engaged in a trade or business, and
``(2) who, in the course of such trade or business,
receives from any individual interest aggregating $600 or more
for any calendar year on a specified passenger vehicle loan,
shall make the return described in subsection (b) with respect to each
individual from whom such interest was received at such time as the
Secretary may provide.
``(b) Form and Manner of Returns.--A return is described in this
subsection if such return--
``(1) is in such form as the Secretary may prescribe, and
``(2) contains--
``(A) the name and address of the individual from
whom the interest described in subsection (a)(2) was
received,
``(B) the amount of such interest received for the
calendar year,
``(C) the amount of outstanding principal on the
specified passenger vehicle loan as of the beginning of
such calendar year,
``(D) the date of the origination of such loan,
``(E) the year, make, and model of the applicable
passenger vehicle which secures such loan (or such
other description of such vehicle as the Secretary may
prescribe), and
``(F) such other information as the Secretary may
prescribe.
``(c) Statements To Be Furnished to Individuals With Respect to
Whom Information Is Required.--Every person required to make a return
under subsection (a) shall furnish to each individual whose name is
required to be set forth in such return a written statement showing--
``(1) the name, address, and phone number of the
information contact of the person required to make such return,
and
``(2) the information described in subparagraphs (B), (C),
(D), and (E) of subsection (b)(2) with respect to such
individual (and such information as is described in subsection
(b)(2)(F) with respect to such individual as the Secretary may
provide for purpoeses of this subsection).
The written statement required under the preceding sentence shall be
furnished on or before January 31 of the year following the calendar
year for which the return under subsection (a) was required to be made.
``(d) Definitions.--For purposes of this section--
``(1) In general.--Terms used in this section which are
also used in paragraph (4) of section 163(h) shall have the
same meaning as when used in such paragraph.
``(2) Specified passenger vehicle loan.--The term
`specified passenger vehicle loan' means the indebtedness
described in section 163(h)(4)(B) with respect to any
applicable passenger vehicle.
``(e) Regulations.--The Secretary shall issue such regulations or
other guidance as may be necessary or appropriate to carry out the
purposes of this section, including regulations or other guidance to
prevent the duplicate reporting of information under this section.''.
(d) Conforming Amendments.--
(1) Section 56(e)(1)(B) of such Code is amended by striking
``section 163(h)(4)'' and inserting ``section 163(h)(5)''.
(2) The table of sections for subpart B of part III of
subchapter A of chapter 61 of such Code is amended by adding at
the end the following new item:
``Sec. 6050AA. Returns relating to applicable passenger vehicle loan
interest received in trade or business from
individuals.''.
(e) Effective Date.--The amendments made by this section shall
apply to indebtedness incurred after December 31, 2024.
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