HR3450-119

1. No tax on car loan interest 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: 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. 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. Such term shall not include any amount paid or incurred on any of the following: A loan to finance fleet sales. A personal cash loan secured by a vehicle previously purchased by the taxpayer. A loan incurred for the purchase of a commercial vehicle that is not used for personal purposes. Any lease financing. A loan to finance the purchase of a vehicle with a salvage title. A loan to finance the purchase of a vehicle intended to be used for scrap or parts. The amount of interest taken into account by a taxpayer under subparagraph (B) for any taxable year shall not exceed $10,000. 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). 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. The term applicable passenger vehicle means any vehicle— which is manufactured primarily for use on public streets, roads, and highways, which has at least 2 wheels, and which is a car, minivan, van, sport utility vehicle, pickup truck, or motorcycle, which is an all-terrain vehicle (designed for use on land), or any trailer, camper, or vehicle (designed for use on land) which— is designed to provide temporary living quarters for recreational, camping, or seasonal use, and is a motor vehicle or is designed to be towed by, or affixed to, a motor vehicle. For purposes of this paragraph— 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. 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. 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. 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. Section 62(a) of such Code is amended by inserting after paragraph (21) the following new paragraph: So much of the deduction allowed by section 163(a) as is attributable to the exception under section 163(h)(4)(A). 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: Any person— who is engaged in a trade or business, and 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, A return is described in this subsection if such return— is in such form as the Secretary may prescribe, and contains— the name and address of the individual from whom the interest described in subsection (a)(2) was received, the amount of such interest received for the calendar year, the amount of outstanding principal on the specified passenger vehicle loan as of the beginning of such calendar year, the date of the origination of such loan, 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 such other information as the Secretary may prescribe. 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— the name, address, and phone number of the information contact of the person required to make such return, and 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). For purposes of this section— 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. The term specified passenger vehicle loan means the indebtedness described in section 163(h)(4)(B) with respect to any applicable passenger vehicle. 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. Section 56(e)(1)(B) of such Code is amended by striking section 163(h)(4) and inserting section 163(h)(5). 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: The amendments made by this section shall apply to indebtedness incurred after December 31, 2024. (4)Special rules for taxable years 2024 through 2028 relating to qualified passenger vehicle loan interest (A)In generalIn 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 generalFor 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)ExceptionsSuch 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 limitThe 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 generalThe 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 incomeFor 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 vehicleThe 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 rulesFor purposes of this paragraph— (i)All-terrain vehicleThe 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 assemblyFor 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 refinancingIndebtedness 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 partiesIndebtedness 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.. (22)Qualified passenger vehicle loan interestSo much of the deduction allowed by section 163(a) as is attributable to the exception under section 163(h)(4)(A).. 6050AA.Returns relating to applicable passenger vehicle loan interest received in trade or business from individuals (a)In generalAny 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 returnsA 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)DefinitionsFor purposes of this section— (1)In generalTerms 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 loanThe term specified passenger vehicle loan means the indebtedness described in section 163(h)(4)(B) with respect to any applicable passenger vehicle. (e)RegulationsThe 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.. Sec. 6050AA. Returns relating to applicable passenger vehicle loan interest received in trade or business from individuals..