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. (119th Congress)
Summary
H.R.3450 proposes amending the Internal Revenue Code of 1986 to allow taxpayers to deduct qualified passenger vehicle loan interest paid between 2024 and 2028. The deduction is subject to limitations, including a maximum interest deduction of $10,000 and income-based phaseouts. The bill also includes reporting requirements for those who receive $600 or more in passenger vehicle loan interest from an individual in a calendar year.
Expected Effects
If enacted, this bill would reduce the tax burden for individuals who finance the purchase of passenger vehicles. This could stimulate vehicle sales and provide financial relief to car owners. The reporting requirements would increase administrative burden on lenders.
Potential Benefits
- Provides a tax deduction for interest paid on passenger vehicle loans, reducing the overall cost of vehicle ownership.
- Could stimulate the automotive industry by making vehicle purchases more affordable.
- The deduction is available whether or not the taxpayer itemizes, expanding its reach.
- Refinancing of existing car loans is also covered, providing flexibility to borrowers.
- The bill defines 'applicable passenger vehicle' broadly, including cars, trucks, SUVs, motorcycles, and certain recreational vehicles.
Potential Disadvantages
- The deduction is limited to $10,000 of interest and phases out for higher-income taxpayers, reducing its benefit for some.
- The bill introduces complexity into the tax code, potentially increasing compliance costs.
- The exclusion of vehicles not assembled in the US could harm consumers by limiting choice and increasing costs.
- The reporting requirements on lenders could increase the cost of borrowing.
- The bill only applies for a limited time (2024-2028), creating uncertainty for long-term financial planning.
Most Disadvantaged Areas:
Constitutional Alignment
The bill falls under the purview of Congress's power to lay and collect taxes, duties, imposts, and excises, as outlined in Article I, Section 8, Clause 1 of the Constitution. The bill aims to promote the general welfare by providing tax relief to individuals purchasing passenger vehicles. The bill does not appear to infringe upon any specific constitutional rights or freedoms.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).